CLANCY EXPLORATION LIMITED - ASXClancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 CHAIRMAN’S LETTER 2 Dear Fellow Shareholders, On behalf of the board, I

Clancy Exploration LimitedACN 105 578 756

PO Box 7040 Orange NSW 2800Ph: (02) 6361 1285 Fax: (02) 6361 1202

Email: [email protected]: www.clancyexploration.com ANNUAL REPORT 2015

ACN 105 578 756

CLA

NC

Y EXPLO

RATION

LIMITED

A

NN

UA

L REPORT 2015

For

per

sona

l use

onl

y

1

CORPORATE DIRECTORY

DIRECTORS

Dr. Michael Etheridge Non-Executive Chairman Mr. Gordon Barnes Managing Director Mr. Nathan Featherby Non-Executive Director Mr. Evan Cranston Non-Executive Director COMPANY SECRETARY

Mr. Rowan Caren CHIEF FINANCIAL OFFICER

Ms. Kellie Pickering

LAWYERS

Holborn Lenhoff Massey 3rd Floor, Irwin Chambers 16 Irwin Street Perth, Western Australia, 6000 Watson Mangioni Level 13 50 Carrington Street Sydney, New South Wales, 2000

SHARE REGISTRY

Security Transfer Registrars 770 Canning Highway Applecross Western Australia 6153 Telephone: +61 8 9315 2333 Facsimile: +61 8 9315 2233

PRINCIPAL PLACE OF BUSINESS

3 Corporation Place Orange, New South Wales, 2800 Telephone: (02) 6361 1285 Facsimile: (02) 6361 1202 Website: www.clancyexploration.com REGISTERED OFFICE

3 Corporation Place Orange, New South Wales, 2800

AUDITOR

Ernst & Young Ernst & Young Centre 680 George Street Sydney New South Wales 2000 ASX CODE CLY

INDEX Operations Report .............................................................................................................. ............................. 3 Financial Statements ..................................................................................................................................... 12

Chairman’s Address ............................................................................................................ ............................. 2

Directors' Report ............................................................................................................. ............................. 13 Auditor's Independence Declar ........................................................................................... ................ 24 Statement of Comprehensive Income ............................................................................................ ............. 25 Statement of Financial Pos n .............................................................................................. ..................... 26 Statement of Changes In Equity ............................................................................................... ................... 27 Statement of Cash Flows ...................................................................................................... ....................... 28 Notes to the Accounts ........................................................................................................ ......................... 29 Directors' Declar ....................................................................................................... ........................... 63 Independent Auditor's Report ................................................................................................. .................... 64 ASX A Infor n .................................................................................................... ....................... 66 List of Mineral Tenements ..................................................................................................... ........................ 68 Corporate Governance N ce ................................................................................................... .................... 69

1

For

per

sona

l use

onl

y

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015

CHAIRMAN’S LETTER

2

Dear Fellow Shareholders, On behalf of the board, I would like to present to you the Annual Report for Clancy Exploration Limited (“Clancy”) for the 2014-15 financial year. It has been a very difficult year for the junior mineral exploration sector and Clancy has not been immune. However, we have shepherded our funds while maintaining exploration momentum by attracting joint venture partners to invest in a number of our properties. At the same time, we have continued to search for a suitable flagship project to take the Company forward and to build our relationship with our shareholder and joint venture partner, High Power Exploration Inc (“HPX”). The joint ventures with Mitsubishi Materials Corporation (“MMC”) at Cundumbul and Genaren,

and with Kaizen Discovery Inc (“Kaizen”) at Fairholme continued through the year, with drill testing of targets generated earlier. MMC notified the Company after year end that they are withdrawing from their joint ventures, and those projects revert 100% to Clancy. The Kaizen joint venture at Fairholme has involved targeting using HPX’s proprietary Typhoon geophysical technology, and the first phase of follow-up drilling on a number of the defined targets. The drilling identified low-grade copper-gold porphyry mineralization with broad zones of porphyry-style alteration and disseminated sulphide. It is expected that Kaizen will fund a further drill program next year to test additional targets.

Two new joint ventures were initiated during the year. HPX entered a joint venture and share subscription agreement on the Trundle project, and the initial phase of Typhoon geophysics has been completed. Targeting utilising the Typhoon survey data is currently underway and will be followed up by initial drill testing this year. The Company also entered into a farm-in agreement with Ramelius Resources Limited (“Ramelius”) on the Condobolin project. The joint venture work program at Condobolin commenced late in the year with a geophysical survey to define new drill targets and extensions of known mineralization.

Your management and board continue to review new opportunities for Clancy, and to work closely with HPX to strengthen our capacity to take advantage of opportunities that arise.

On the corporate front, a number of shareholders actively worked against the board during the year, expressing concern, in particular, that the board had failed to deliver a flagship project. Following discussions with a number of these shareholders, board changes were implemented, with James MacDonald resigning from the board and Nathan Featherby and Evan Cranston joining as directors in late October 2014. Despite these changes, the Company’s remuneration report was voted down at the AGM and the finance director, Natalie Forsyth-Stock was forced to resign. In early December, a notice was lodged under Section 249(d) of the Corporations Act for a general meeting to remove me as a director. The general meeting was held in February 2015, and the resolution to remove me was defeated. More importantly, a resolution to enter into a share subscription agreement and a joint venture on the Trundle project with HPX was approved at the same meeting, strengthening our relationship with a technically and financially very well credentialed group. Despite these issues, the board and management of Clancy continue to work professionally and assiduously to continue exploration under its current joint ventures and to accelerate the search for new flagship projects. Yours sincerely, Dr. Mike Etheridge Chairman

2

For

per

sona

l use

onl

y


CHAIRMAN’S LETTER

2

Dear Fellow Shareholders, On behalf of the board, I would like to present to you the Annual Report for Clancy Exploration Limited (“Clancy”) for the 2014-15 financial year. It has been a very difficult year for the junior mineral exploration sector and Clancy has not been immune. However, we have shepherded our funds while maintaining exploration momentum by attracting joint venture partners to invest in a number of our properties. At the same time, we have continued to search for a suitable flagship project to take the Company forward and to build our relationship with our shareholder and joint venture partner, High Power Exploration Inc (“HPX”). The joint ventures with Mitsubishi Materials Corporation (“MMC”) at Cundumbul and Genaren,

and with Kaizen Discovery Inc (“Kaizen”) at Fairholme continued through the year, with drill testing of targets generated earlier. MMC notified the Company after year end that they are withdrawing from their joint ventures, and those projects revert 100% to Clancy. The Kaizen joint venture at Fairholme has involved targeting using HPX’s proprietary Typhoon geophysical technology, and the first phase of follow-up drilling on a number of the defined targets. The drilling identified low-grade copper-gold porphyry mineralization with broad zones of porphyry-style alteration and disseminated sulphide. It is expected that Kaizen will fund a further drill program next year to test additional targets.

Two new joint ventures were initiated during the year. HPX entered a joint venture and share subscription agreement on the Trundle project, and the initial phase of Typhoon geophysics has been completed. Targeting utilising the Typhoon survey data is currently underway and will be followed up by initial drill testing this year. The Company also entered into a farm-in agreement with Ramelius Resources Limited (“Ramelius”) on the Condobolin project. The joint venture work program at Condobolin commenced late in the year with a geophysical survey to define new drill targets and extensions of known mineralization.

Your management and board continue to review new opportunities for Clancy, and to work closely with HPX to strengthen our capacity to take advantage of opportunities that arise.

On the corporate front, a number of shareholders actively worked against the board during the year, expressing concern, in particular, that the board had failed to deliver a flagship project. Following discussions with a number of these shareholders, board changes were implemented, with James MacDonald resigning from the board and Nathan Featherby and Evan Cranston joining as directors in late October 2014. Despite these changes, the Company’s remuneration report was voted down at the AGM and the finance director, Natalie Forsyth-Stock was forced to resign. In early December, a notice was lodged under Section 249(d) of the Corporations Act for a general meeting to remove me as a director. The general meeting was held in February 2015, and the resolution to remove me was defeated. More importantly, a resolution to enter into a share subscription agreement and a joint venture on the Trundle project with HPX was approved at the same meeting, strengthening our relationship with a technically and financially very well credentialed group. Despite these issues, the board and management of Clancy continue to work professionally and assiduously to continue exploration under its current joint ventures and to accelerate the search for new flagship projects. Yours sincerely, Dr. Mike Etheridge Chairman

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 OPERATIONS REPORT

3

New South Wales Projects Clancy’s tenement portfolio in NSW consists of 10 exploration projects covering 1,381km2 in the Lachlan Fold Belt, which hosts several large porphyry copper-gold deposits in the Macquarie Arc, including the world class deposits in the Cadia Valley near Orange. Clancy’s targeting indicates that the geological environment within the Macquarie Arc projects is prospective for porphyry copper-gold deposits. Clancy also has projects outside of the Macquarie Arc that are prospective for gold, base metals and molybdenum.

Location of Clancy projects in central NSW.

During the year, two new joint ventures were formed with Ramelius Resources Limited at Condobolin and High Power Exploration Inc (HPX) at Trundle. Subsequent to 30 June 2015, the Company received notice from Mitsubishi Materials Corporation (MMC) that it would not continue with formal joint ventures on the Cundumbul and Genaren projects, having met its A$3 million earn-in expenditure commitment over three years. Both of these projects have now reverted to 100% Clancy ownership. The Clancy portfolio in NSW consists of 7 wholly owned projects and 3 joint venture projects. A total of 7,450m of drilling was completed on the NSW project portfolio in the 12 months to 30 June 2015.

3

For

per

sona

l use

onl

y


4

Condobolin EL7399 (Clancy 100%; Ramelius earning 80% and funding 100%)

Condobolin EL7399 is located in the central west of NSW immediately north of the Condobolin township. Condobolin has a substantial mining history, predominantly as a base metals field (lead, zinc and copper), as well as gold. The mineralisation is hosted in epithermal-style quartz veins within the metasedimentary units of the Ordovician Girilambone Group, associated with pyrite, sphalerite, galena, chalcopyrite, arsenopryrite and free gold.

The Company entered into a farm-in agreement with Ramelius Resources Limited (ASX: RMS) on the Condobolin project in April 2015. Under the terms of the agreement, Ramelius has the right to earn 80% of the Condobolin project by funding A$2 million for exploration over four years. If Ramelius withdraws before earning 80%, the project ownership reverts 100% to Clancy. After the farm-in phase is completed, Clancy will be carried to a decision to mine, at which point Clancy will have the right to contribute its 20% share of costs post decision to mine, or dilute according to standard industry provisions. If Clancy’s interest dilutes to 5%, it will convert to a 2% Net Smelter Royalty. Ramelius will be project manager, however Clancy will be the project operator during the farm-in phase and will be entitled to a 10% management fee on services provided.

A 3D IP survey to extend the previous IP survey coverage at Meritilga was completed in early July 2015. The aim of the survey was to further define basement structures associated with the numerous gold and base metal occurrences in the Condobolin Mineral Field. Interpretation of the IP survey data is in progress at the time of writing.

Trundle EL8222 (Clancy 100%; HPX earning 51%)

During the year Clancy formed a joint venture with HPX to earn into the Trundle project. Under the terms of the agreement, HPX will fund A$1 million on exploration over 12 months to earn an initial 51% of the Trundle project with a minimum spend of A$750,000 (Phase 1). HPX may then sole fund an additional A$4 million over 3 years (Phase 2) to earn an additional 29% of the Trundle project, for a total of 80%. Failure to meet the Phase 2 commitment will result in 100% of the Trundle project reverting to Clancy. After the completion of Phase 2, Clancy will have the right to contribute its 20% share of costs, or dilute according to standard industry provisions. If Clancy’s interest dilutes to 5%, its interest in the project will convert to a 2% Net Smelter Royalty.

Trundle consists of one exploration licence EL8222 located 25km west of the Northparkes copper-gold mine. Numerous porphyry and skarn prospects at Trundle occur along a 12.5km long prospective corridor extending from Botfield in the south to Pig Pen in the north. Previous drilling has established that low-grade porphyry copper-gold systems are associated with coarse grained monzonite porphyry intrusions hosted by andesitic fragmental and flow units at Mordialloc and Bloomfield’s. Numerous skarn-style copper-gold occurrences are also present at Trundle Park, Willcox’s, Dunns, Wayne’s and Mordialloc. At Trundle Park, monzonite with quartz-calcite-molybdenite-pyrite-chalcopyrite veins at depth, indicate a transition from shallow skarn mineralisation to deeper porphyry mineralisation.

The tenor and style of the skarn copper-gold intercepts are consistent with the outer zone of a gold-rich Ordovician porphyry system. At Trundle Park these intercepts are associated with magnetite skarn, similar in style to the Big Cadia skarn that is peripheral to the world-class Cadia porphyry copper-gold deposits near Orange in NSW.

4

For

per

sona

l use

onl

y


4

Condobolin EL7399 (Clancy 100%; Ramelius earning 80% and funding 100%)

Condobolin EL7399 is located in the central west of NSW immediately north of the Condobolin township. Condobolin has a substantial mining history, predominantly as a base metals field (lead, zinc and copper), as well as gold. The mineralisation is hosted in epithermal-style quartz veins within the metasedimentary units of the Ordovician Girilambone Group, associated with pyrite, sphalerite, galena, chalcopyrite, arsenopryrite and free gold.

The Company entered into a farm-in agreement with Ramelius Resources Limited (ASX: RMS) on the Condobolin project in April 2015. Under the terms of the agreement, Ramelius has the right to earn 80% of the Condobolin project by funding A$2 million for exploration over four years. If Ramelius withdraws before earning 80%, the project ownership reverts 100% to Clancy. After the farm-in phase is completed, Clancy will be carried to a decision to mine, at which point Clancy will have the right to contribute its 20% share of costs post decision to mine, or dilute according to standard industry provisions. If Clancy’s interest dilutes to 5%, it will convert to a 2% Net Smelter Royalty. Ramelius will be project manager, however Clancy will be the project operator during the farm-in phase and will be entitled to a 10% management fee on services provided.

A 3D IP survey to extend the previous IP survey coverage at Meritilga was completed in early July 2015. The aim of the survey was to further define basement structures associated with the numerous gold and base metal occurrences in the Condobolin Mineral Field. Interpretation of the IP survey data is in progress at the time of writing.

Trundle EL8222 (Clancy 100%; HPX earning 51%)

During the year Clancy formed a joint venture with HPX to earn into the Trundle project. Under the terms of the agreement, HPX will fund A$1 million on exploration over 12 months to earn an initial 51% of the Trundle project with a minimum spend of A$750,000 (Phase 1). HPX may then sole fund an additional A$4 million over 3 years (Phase 2) to earn an additional 29% of the Trundle project, for a total of 80%. Failure to meet the Phase 2 commitment will result in 100% of the Trundle project reverting to Clancy. After the completion of Phase 2, Clancy will have the right to contribute its 20% share of costs, or dilute according to standard industry provisions. If Clancy’s interest dilutes to 5%, its interest in the project will convert to a 2% Net Smelter Royalty.

Trundle consists of one exploration licence EL8222 located 25km west of the Northparkes copper-gold mine. Numerous porphyry and skarn prospects at Trundle occur along a 12.5km long prospective corridor extending from Botfield in the south to Pig Pen in the north. Previous drilling has established that low-grade porphyry copper-gold systems are associated with coarse grained monzonite porphyry intrusions hosted by andesitic fragmental and flow units at Mordialloc and Bloomfield’s. Numerous skarn-style copper-gold occurrences are also present at Trundle Park, Willcox’s, Dunns, Wayne’s and Mordialloc. At Trundle Park, monzonite with quartz-calcite-molybdenite-pyrite-chalcopyrite veins at depth, indicate a transition from shallow skarn mineralisation to deeper porphyry mineralisation.

The tenor and style of the skarn copper-gold intercepts are consistent with the outer zone of a gold-rich Ordovician porphyry system. At Trundle Park these intercepts are associated with magnetite skarn, similar in style to the Big Cadia skarn that is peripheral to the world-class Cadia porphyry copper-gold deposits near Orange in NSW.


5

Trundle EL8222 (black perimeter) showing the area covered by the Typhoon IP survey (yel low

perimeter), the RTP ground magnetic image with the prospective corridor highlighted (white dashes) and skarn and porphyry prospects ( label l ed). The background image is the aerial photograph.

At Cadia, the skarn mineralisation is up to 1.5km away from the causative porphyry intrusion; however the skarn mineral assemblages at Trundle suggest the causative intrusions are proximal rather than distal. The source of the skarn mineralisation along the 12.5km long prospective corridor is likely to be monzonite porphyry intrusions at depth, similar to the Northparkes porphyry mine, which is located 25km to the east of Trundle. Similarities between Trundle and Northparkes have

5

For

per

sona

l use

onl

y


6

been highlighted previously and the two areas may once have been part of the same porphyry complex.

Limited previous drilling at Trundle Park, Bloomfield’s and Mordialloc has tested to depths of up to 400m vertical, however most previous drill holes are less than 50m deep. Therefore, significant scope remains for porphyry discovery at depth along the prospective corridor.

A Typhoon perpendicular pole-dipole IP survey was completed across the prospective corridor in August 2015. The Typhoon IP survey will detect chargeable bodies down to a vertical depth of up to 1500m, depending on surface conductivities. This will assist with defining the deeper source of the copper-gold anomalism and vectoring to the richer potassic core of the porphyry system.

Data processing is in progress and will be followed by inversion modelling and drill target selection. Drilling of targets is likely to commence in the December 2015 quarter.

Fairholme EL6552 and EL6915 (Clancy 51%; Kaizen Discovery Inc 49%, earning 65% and funding 100%)

Clancy formed a joint venture with High Power Exploration Inc. (HPX) on the Fairholme project in 2013. Under the terms of the Agreement, HPX had the right to earn an initial 49% of the Fairholme project by funding A$1 million in exploration, which has now been completed. HPX transferred its JV interest to a majority owned listed subsidiary Kaizen Discovery Inc. (Kaizen) in late 2013. Kaizen has the right to fund a further A$4 million in exploration before December 2017 with the aim of delineating a scoping study to take Kaizen’s stake to 65%.

Clancy will manage the project on behalf of the joint venture partners during the first two earn-in phases. Kaizen can increase its stake to 80% or 85% by funding a Prefeasibility Study, depending on the cost of the study.

The Fairholme project is located about 12 km NE of Burcher and 12km north of the Cowal gold mine. The project consists of two tenements, EL6552 and EL6915 that cover 172km2 of the Fairholme Igneous Complex. The geophysical characteristics of the Fairholme Igneous Complex are similar to the Cowal Complex to the south, which hosts the Cowal gold mine (Barrick) and the Marsden copper-gold prospect (Newcrest).

In 2013, HPX completed a gradient array Induced Polarisation (IP) survey using HPX’s proprietary Typhoon system. A number of chargeable IP anomalies were defined at the porphyry-style prospects at Dungarvan, Gateway and Boundary, which were subsequently followed up with higher resolution Typhoon 3D IP survey in 2014. A total acquisition of 424.6 line km of Typhoon 3D time domain IP data was completed.

The 3D IP data were inverted jointly in 3D with the gradient array IP data collected in 2013. The 3D inversion models were constrained by physical property measurements on drill core (density, porosity, chargeability, resistivity and remanent magnetism). Several chargeable anomalies were defined, including a large three-lobe basement chargeable anomaly at Dungarvan.

Diamond drilling of the Dungarvan IP chargeability targets (Targets 3, 5 & 1) was completed in February 2015. Four holes were completed for a total of 2,453m. Targets 3 and 5 coincided with the main magnetic-intrusive centre at the Dungarvan Prospect (FHD004-5 and FHD007) and Target 1 was the strongest chargeability high which lies ~500m NW of the Dungarvan magnetic high.

The holes drilled in to the magnetic-intrusive centre at Targets 3 and 5 (FHD004-5 & 7) intersected an extensive low-grade porphyry system consisting of diorite, monzodiorite, intermediate feldspar-hornblende porphyry and intermediate feldspar porphyry intrusions hosted by an intermediate package of bedded matrix-supported polymictic conglomerate and medium to fine-grained volcaniclastic rocks. Unfortunately, porphyry-style veining was uncommon, although chalcopyrite

6

For

per

sona

l use

onl

y


6

been highlighted previously and the two areas may once have been part of the same porphyry complex.

Limited previous drilling at Trundle Park, Bloomfield’s and Mordialloc has tested to depths of up to 400m vertical, however most previous drill holes are less than 50m deep. Therefore, significant scope remains for porphyry discovery at depth along the prospective corridor.

A Typhoon perpendicular pole-dipole IP survey was completed across the prospective corridor in August 2015. The Typhoon IP survey will detect chargeable bodies down to a vertical depth of up to 1500m, depending on surface conductivities. This will assist with defining the deeper source of the copper-gold anomalism and vectoring to the richer potassic core of the porphyry system.

Data processing is in progress and will be followed by inversion modelling and drill target selection. Drilling of targets is likely to commence in the December 2015 quarter.

Fairholme EL6552 and EL6915 (Clancy 51%; Kaizen Discovery Inc 49%, earning 65% and funding 100%)

Clancy formed a joint venture with High Power Exploration Inc. (HPX) on the Fairholme project in 2013. Under the terms of the Agreement, HPX had the right to earn an initial 49% of the Fairholme project by funding A$1 million in exploration, which has now been completed. HPX transferred its JV interest to a majority owned listed subsidiary Kaizen Discovery Inc. (Kaizen) in late 2013. Kaizen has the right to fund a further A$4 million in exploration before December 2017 with the aim of delineating a scoping study to take Kaizen’s stake to 65%.

Clancy will manage the project on behalf of the joint venture partners during the first two earn-in phases. Kaizen can increase its stake to 80% or 85% by funding a Prefeasibility Study, depending on the cost of the study.

The Fairholme project is located about 12 km NE of Burcher and 12km north of the Cowal gold mine. The project consists of two tenements, EL6552 and EL6915 that cover 172km2 of the Fairholme Igneous Complex. The geophysical characteristics of the Fairholme Igneous Complex are similar to the Cowal Complex to the south, which hosts the Cowal gold mine (Barrick) and the Marsden copper-gold prospect (Newcrest).

In 2013, HPX completed a gradient array Induced Polarisation (IP) survey using HPX’s proprietary Typhoon system. A number of chargeable IP anomalies were defined at the porphyry-style prospects at Dungarvan, Gateway and Boundary, which were subsequently followed up with higher resolution Typhoon 3D IP survey in 2014. A total acquisition of 424.6 line km of Typhoon 3D time domain IP data was completed.

The 3D IP data were inverted jointly in 3D with the gradient array IP data collected in 2013. The 3D inversion models were constrained by physical property measurements on drill core (density, porosity, chargeability, resistivity and remanent magnetism). Several chargeable anomalies were defined, including a large three-lobe basement chargeable anomaly at Dungarvan.

Diamond drilling of the Dungarvan IP chargeability targets (Targets 3, 5 & 1) was completed in February 2015. Four holes were completed for a total of 2,453m. Targets 3 and 5 coincided with the main magnetic-intrusive centre at the Dungarvan Prospect (FHD004-5 and FHD007) and Target 1 was the strongest chargeability high which lies ~500m NW of the Dungarvan magnetic high.

The holes drilled in to the magnetic-intrusive centre at Targets 3 and 5 (FHD004-5 & 7) intersected an extensive low-grade porphyry system consisting of diorite, monzodiorite, intermediate feldspar-hornblende porphyry and intermediate feldspar porphyry intrusions hosted by an intermediate package of bedded matrix-supported polymictic conglomerate and medium to fine-grained volcaniclastic rocks. Unfortunately, porphyry-style veining was uncommon, although chalcopyrite


7

associated with the feldspar porphyry intrusions was present in disseminated form. More extensive disseminated pyrite-pyrrhotite-chalcopyrite and magnetite bodies are inferred to be the source of the chargeability anomalies.

Plan view of Dungarvan with the background reduced to pole magnetic image, showing the locations of dril l str ings with reference to the Typhoon IP chargeabil ity anomaly targets (contours) . Historic dri l l

hole collars are also shown coloured by the >500ppm maximum-in-hole copper.

Anomalous intercepts from Targets 3 and 5 include1:

FHD004: o 2m @ 0.25 g/t Au from 36m; o 4m @ 0.11% Cu from 63m; o 1m @ 244 ppm Mo from 412m.

FHD005: o 6m @ 0.16% Cu from 135m; o 4m @ 0.15% Cu from 452m.

FHD007: o 11m @ 0.12% Cu from 64m; o 1m @ 1.58 g/t Au from 94 m (oxide); o 5m @ 0.12% Cu from 302m;

1 Refer to the March 2015 quarterly activities report dated 29 April 2015 for further details.

Dungarvan

7

For

per

sona

l use

onl

y


8

o 4m @ 0.1% Cu from 387m; o 2m @ 0.16% Cu from 395m.

Target 1 was drilled by FHD006 testing for possible blind Cu-Au mineralised intrusions. This hole intersected strongly sheared intermediate well-bedded fine to medium grained volcaniclastic rocks with lesser conglomerate and much lesser feldspar porphyry intrusions. Mineralisation consisted primarily of pyrite and pyrrhotite-chalcopyrite. Acicular arsenopyrite was present as haloes to rare quartz veins. Alteration was dominated by sericite-chlorite and lesser epidote and no evidence of a blind porphyry intrusive centre was found.

Anomalous intercepts from Target 12 include:

FHD006: o 1m @ 0.43 g/t Au from 94m; o 2m @ 0.13% Cu from 413m.

The 3D inversion generated using the gradient and 3D array data successfully mapped disseminated sulphide in basement rocks buried under conductive cover in most of the survey area. The drilling program confirmed the presence of a low-grade Cu-Au-Mo bearing porphyry system at Dungarvan, which is crosscut by numerous steep low temperature carbonate-bearing semi-ductile shears.

Future work will include an assessment of the prospectivity of the area and potentially further drilling dependent on internal reviews of the project. The drilling was part funded by a grant from the NSW New Frontiers Cooperative drilling fund.

Cundumbul EL6661 and EL7399 (Clancy 100%)

The Cundumbul project is located in the Molong Volcanic Belt between Molong and Wellington. There are numerous intrusive complexes at Cundumbul that have anomalous copper and/or gold associated with them. Exploration in the year to 30 June 2015 was carried out under a former joint venture with MMC. MMC withdrew from the joint venture in August 2015.

RC drilling (21 holes; 2,924m) was completed at the Bell and Andrews prospects. At Bell, the drilling tested for the presence of a vertical alteration halo and mineralisation zonation. Intense silica-sericite-pyrite alteration was intersected, associated with a roughly N-S trending shear zone and gravity low anomalies. Mineralisation consists of pyrite, very minor chalcopyrite and molybdenite in quartz-carbonate veins. RC drilling at the Andrews prospect targeted coincident 3D IP and geochemical anomalies.

Significant intercepts of molybdenum with high-grade intervals (>0.1% Mo) were returned from Bell: 14m @ 732ppm Mo (160-174m, CNRC010), incl. 4m @ 0.176% Mo (168-172m); and, 16m @ 216ppm Mo (68-84m, CNRC009), incl. 2m @ 704ppm Mo (70-72m)3. The mineralisation is associated with a gravity low anomaly which may represent a deeper intrusive source for the mineralisation.

The Bell molybdenum mineralisation occurs in shear zones and quartz veins proximal to a range of evolved intrusive dykes, including monzonite, microdiorite and aplite. The host rocks surrounding the intrusives are very strongly altered.

A follow-up diamond drilling program was completed in February 2015, for a total of 735.7m. Interbedded volcanic sandstones and siltstones and intermediate volcaniclastics of the Ordovician

2 Refer to the March 2015 quarterly activities report dated 29 April 2015 for further details. 3 Refer to ASX release dated 3 December 2014 for further details

8

For

per

sona

l use

onl

y


8

o 4m @ 0.1% Cu from 387m; o 2m @ 0.16% Cu from 395m.

Target 1 was drilled by FHD006 testing for possible blind Cu-Au mineralised intrusions. This hole intersected strongly sheared intermediate well-bedded fine to medium grained volcaniclastic rocks with lesser conglomerate and much lesser feldspar porphyry intrusions. Mineralisation consisted primarily of pyrite and pyrrhotite-chalcopyrite. Acicular arsenopyrite was present as haloes to rare quartz veins. Alteration was dominated by sericite-chlorite and lesser epidote and no evidence of a blind porphyry intrusive centre was found.

Anomalous intercepts from Target 12 include:

FHD006: o 1m @ 0.43 g/t Au from 94m; o 2m @ 0.13% Cu from 413m.

The 3D inversion generated using the gradient and 3D array data successfully mapped disseminated sulphide in basement rocks buried under conductive cover in most of the survey area. The drilling program confirmed the presence of a low-grade Cu-Au-Mo bearing porphyry system at Dungarvan, which is crosscut by numerous steep low temperature carbonate-bearing semi-ductile shears.

Future work will include an assessment of the prospectivity of the area and potentially further drilling dependent on internal reviews of the project. The drilling was part funded by a grant from the NSW New Frontiers Cooperative drilling fund.

Cundumbul EL6661 and EL7399 (Clancy 100%)

The Cundumbul project is located in the Molong Volcanic Belt between Molong and Wellington. There are numerous intrusive complexes at Cundumbul that have anomalous copper and/or gold associated with them. Exploration in the year to 30 June 2015 was carried out under a former joint venture with MMC. MMC withdrew from the joint venture in August 2015.

RC drilling (21 holes; 2,924m) was completed at the Bell and Andrews prospects. At Bell, the drilling tested for the presence of a vertical alteration halo and mineralisation zonation. Intense silica-sericite-pyrite alteration was intersected, associated with a roughly N-S trending shear zone and gravity low anomalies. Mineralisation consists of pyrite, very minor chalcopyrite and molybdenite in quartz-carbonate veins. RC drilling at the Andrews prospect targeted coincident 3D IP and geochemical anomalies.

Significant intercepts of molybdenum with high-grade intervals (>0.1% Mo) were returned from Bell: 14m @ 732ppm Mo (160-174m, CNRC010), incl. 4m @ 0.176% Mo (168-172m); and, 16m @ 216ppm Mo (68-84m, CNRC009), incl. 2m @ 704ppm Mo (70-72m)3. The mineralisation is associated with a gravity low anomaly which may represent a deeper intrusive source for the mineralisation.

The Bell molybdenum mineralisation occurs in shear zones and quartz veins proximal to a range of evolved intrusive dykes, including monzonite, microdiorite and aplite. The host rocks surrounding the intrusives are very strongly altered.

A follow-up diamond drilling program was completed in February 2015, for a total of 735.7m. Interbedded volcanic sandstones and siltstones and intermediate volcaniclastics of the Ordovician

2 Refer to the March 2015 quarterly activities report dated 29 April 2015 for further details. 3 Refer to ASX release dated 3 December 2014 for further details


9

Oakdale Formation were dominant in the drill core, with intermediate hornblende and feldspar porphyries intruding the host sequence. The sequence is strongly sheared with pervasive textural destruction and strong to intense chlorite-clay-hematite-sericite alteration. Within the shear zone there are wide zones of intensely bleached/K-feldspar alteration associated with hornblende porphyries.

Sulphides are constrained to zones of very fine disseminations of pyrite (± chalcopyrite) and late stage quartz-carbonate-base metal veins (galena/chalcopyrite). The late stage base metal veins were not intersected previously, and may indicate vertical zonation of the system. The strong, Mo-bearing, silica-sericite-pyrite (phyllic) alteration observed in the RC drilling was not intersected and no significant drill results were returned. Based on this observation, north-south oriented strike-slip movement on the shear zone is inferred, transposing the continuation of the mineralisation at depth.

The high-grade molybdenum associated with strong phyllic alteration at Bell could be peripheral to copper-gold porphyry-style system and further work is planned to investigate this.

Genaren EL7927 (Clancy 100%)

Genaren is located at the northern end of the Northparkes Igneous Complex 29km north of the Northparkes copper-gold mine. Exploration in the year to 30 June 2015 was carried out under a former joint venture with MMC. MMC withdrew from the joint venture in August 2015.

In the March 2014, Clancy completed 18 reconnaissance air core (AC) drill holes from a planned broader program to test the inferred position of the Wombin Volcanics (host rocks for most of the Northparkes porphyry systems). The AC program was curtailed due to unseasonable wet weather and it resumed in December 2014, with an additional 22 AC holes (1,218m) completed.

Inferred Wombin Volcanics equivalents were intersected, including porphyritic trachyandesite, with strong coincident sericite-hematite alteration, was intersected and lesser amounts of post-Ordovician quartzo-feldspathic volcaniclastic rocks and younger silcrete gravel layers. The most notable result was from drillhole GAAC002 with the intersection of low grade gold at the top of the saprolite layer. The intersection returned 3m @ 0.26 g/t Au from 31m4. Nearby hole GAAC019 returned 9m @ 0.06% Cu from 53m to bottom of hole5. The area in between these two holes has not been tested and further work in the area is being considered.

Orange East EL6181 (Clancy 100%)

Orange East EL6181 is located east of the city of Orange and contains several target styles including Ordovician porphyry copper-gold and post-Ordovician copper-gold targets. Numerous old workings occur in the area and many are focused along regional-scale structures, such as the Lucknow and Godolphin faults. Selective laboratory analysis of auger soil samples show that the Springfield Zn-Cu-Pb-As-Au anomaly continues to the north. The northern portion of the anomaly, as defined by >50 ppm As in soil is 1000m long by 150m wide and the southern portion is 320m long by 150m wide. The Favell Zone is also persistently anomalous in copper for >4 km along strike consistent with the occurrence of a quartz-sulphide vein system along this length. No fieldwork was carried out on the Orange East project in the 12 months to June 2015.

4 Refer to the June 2014 quarterly activities report dated 29 July 2014 for further details 5 Refer to the March 2015 quarterly activities report dated 29 April 2015 for further details

9

For

per

sona

l use

onl

y


10

Kiola EL8151 (Clancy 100%)

Kiola EL8151 is located in the southern part of the Molong volcanic belt, and was granted in August 2013. Kiola has been explored before by Minotaur (2008-2009), Goldminco, (2004-2006) and Gateway (2001-2003) and has a geophysical database comprising magnetics, project-wide VTEM, IP surveys and ground EM surveys. Geophysical work suggests that targets at Kiola may not have been effectively tested. Short wave infrared (SWIR) analysis was completed on previous diamond core. In the Nasdaq area, sericite has a phengitic composition. The presence of phengite indicates hydrothermal activity, therefore further work is recommended to explain this. Other assemblages indicate a regional metamorphic overprint over the Kiola-Nasdaq area. Analysis of the Balbardie holes returned biotite, which is inferred to be a product of low pressure-temperature contact metamorphism from proximal Silurian granite.

Mount Tennyson EL8226 (Clancy 100%)

Mount Tennyson EL8226 was granted in January 2014. It is located about 30 km east of Bathurst, within the Silurian – Devonian rift sequences east of the Molong Volcanic Belt. The project is located in Early Devonian rocks on the margin of the Bathurst Granite, and represents a garnet-quartz-calcite-diopside skarn assemblage. There is a small historical non-JORC compliant molybdenum resource in the prospect with a grade of 0.11% Mo. Mineralisation includes molybdenite and scheelite with accessory powellite. No fieldwork was carried out on the Mount Tennyson project in the 12 months to June 2015. Mount Pleasant EL8237 (Clancy 100%)

Mount Pleasant EL8237 was granted in February 2014 and is located 25 km south of Mudgee. It is a porphyry style Mo-W target in granite. Mineralisation consists predominantly of pyrite with subordinate molybdenum, scheelite, chalcopyrite and bismuthinite. The mineralisation is in a fracture-controlled stockwork of quartz veins. The prospect has an historical non-JORC compliant resource based on data collected between 1979 and 1983. No fieldwork was carried out on the Mount Pleasant project in the 12 months to June 2015.

Koobah EL8302 (Clancy 100%)

Koobah EL8302 is located in the Cowal Igneous Complex, east of the Cowal gold mine and north of the Marsden copper-gold prospect. The project is prospective for Ordovician porphyry copper-gold systems. The Koobah application was lodged in March 2014 and it was granted in September 2014. No work has been completed to date.

Tasmanian Projects Clancy has two joint venture projects with Bass Metals Limited (Bass) and one joint venture project with TNT Mines Pty Ltd (TNT). Bass and TNT manage the respective joint ventures which are located in the Mount Read Volcanic Belt in northwest Tasmania. This area is host to a wide variety of mineral deposits styles, including Renison Bell (tin and silver), Mt Lyell (copper and gold) and the VHMS deposits Rosebery, Hellyer, Que River and Hercules (zinc, silver, lead, copper and gold). More recent

10

For

per

sona

l use

onl

y


10

Kiola EL8151 (Clancy 100%)

Kiola EL8151 is located in the southern part of the Molong volcanic belt, and was granted in August 2013. Kiola has been explored before by Minotaur (2008-2009), Goldminco, (2004-2006) and Gateway (2001-2003) and has a geophysical database comprising magnetics, project-wide VTEM, IP surveys and ground EM surveys. Geophysical work suggests that targets at Kiola may not have been effectively tested. Short wave infrared (SWIR) analysis was completed on previous diamond core. In the Nasdaq area, sericite has a phengitic composition. The presence of phengite indicates hydrothermal activity, therefore further work is recommended to explain this. Other assemblages indicate a regional metamorphic overprint over the Kiola-Nasdaq area. Analysis of the Balbardie holes returned biotite, which is inferred to be a product of low pressure-temperature contact metamorphism from proximal Silurian granite.

Mount Tennyson EL8226 (Clancy 100%)

Mount Tennyson EL8226 was granted in January 2014. It is located about 30 km east of Bathurst, within the Silurian – Devonian rift sequences east of the Molong Volcanic Belt. The project is located in Early Devonian rocks on the margin of the Bathurst Granite, and represents a garnet-quartz-calcite-diopside skarn assemblage. There is a small historical non-JORC compliant molybdenum resource in the prospect with a grade of 0.11% Mo. Mineralisation includes molybdenite and scheelite with accessory powellite. No fieldwork was carried out on the Mount Tennyson project in the 12 months to June 2015. Mount Pleasant EL8237 (Clancy 100%)

Mount Pleasant EL8237 was granted in February 2014 and is located 25 km south of Mudgee. It is a porphyry style Mo-W target in granite. Mineralisation consists predominantly of pyrite with subordinate molybdenum, scheelite, chalcopyrite and bismuthinite. The mineralisation is in a fracture-controlled stockwork of quartz veins. The prospect has an historical non-JORC compliant resource based on data collected between 1979 and 1983. No fieldwork was carried out on the Mount Pleasant project in the 12 months to June 2015.

Koobah EL8302 (Clancy 100%)

Koobah EL8302 is located in the Cowal Igneous Complex, east of the Cowal gold mine and north of the Marsden copper-gold prospect. The project is prospective for Ordovician porphyry copper-gold systems. The Koobah application was lodged in March 2014 and it was granted in September 2014. No work has been completed to date.

Tasmanian Projects Clancy has two joint venture projects with Bass Metals Limited (Bass) and one joint venture project with TNT Mines Pty Ltd (TNT). Bass and TNT manage the respective joint ventures which are located in the Mount Read Volcanic Belt in northwest Tasmania. This area is host to a wide variety of mineral deposits styles, including Renison Bell (tin and silver), Mt Lyell (copper and gold) and the VHMS deposits Rosebery, Hellyer, Que River and Hercules (zinc, silver, lead, copper and gold). More recent


11

discoveries include intrusive-related skarn-style nickel deposits (Avebury) and skarn-style tin-tungsten-iron deposits (Mt Lindsay).

Bass Metals JV's (Bass 75%, Clancy 25%)

Clancy has two joint ventures with Bass: Lake Margaret EL28/2009 located 5km north of the Mt Lyell copper mine and 10km south of the Henty gold mine; and Sock Creek EL20/2010 located 7.5km southwest of the Hellyer mine. Both tenements cover prospective stratigraphy for base metal and gold deposits within the Mount Read Volcanic Belt. No fieldwork was completed on the Bass Metals JV’s in the 12 months to June 2015.

TNT Mines JV's (TNT 75%, Clancy 25%)

Clancy has one joint venture with TNT at Oonah EL63/2004 which is located immediately north of the historic Zeehan lead-zinc-tin field. TNT has identified a magnetic target that is prospective for Renison-style tin mineralisation. One diamond hole was completed into the magnetic target to a depth of 145m. The hole hit highly broken ground within a fault zone. No significant tin mineralisation was intersected. The information in this annual report that relate to Initial Exploration Results is based on information compiled by Mr Gordon Barnes who is a Member of the Australian Institute of Geoscientists. Mr Barnes is a full-time employee of Clancy Exploration Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves”. Mr Gordon Barnes consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

11

For

per

sona

l use

onl

y

CLANCY EXPLORATION LIMITED

ABN: 65 105 578 756 AND CONTROLLED ENTITY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

30 JUNE 2015

12

For

per

sona

l use

onl

y

CLANCY EXPLORATION LIMITED

ABN: 65 105 578 756 AND CONTROLLED ENTITY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

30 JUNE 2015

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 DIRECTORS’ REPORT

2

The Board of Directors has pleasure in presenting its report on the consolidated entity consisting of Clancy Exploration Limited and the entity it controlled at the end of, or during, the year ended 30 June 2015. 1. Directors

(i) Names, Qualifications and Experience The names and details of the Company’s directors in office at any time during the year to 30 June 2015 and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated. Dr. Michael Etheridge, FTSE, FAICD, FAIG, FGSA Non-Executive Chairman Dr. Etheridge is a geologist who has had a varied career in universities, a government research organisation and in industry. He is currently non-executive chairman of ABM Resources Ltd (ASX: ABU) (appointed November 2009). Until November 2013, he was deputy chairman of Zeus Resources Ltd (ASX: ZEU). He was previously a director of Ballarat Gold Fields NL prior to its takeover by Lihir Gold Ltd in March 2007 and of Lihir Gold Ltd (from March 2007 to September 2010), prior to its merger with Newcrest Ltd. He was also a director of Consolidated Minerals Ltd prior to its takeover by Palmary Plc (AIM) and Ariana Resources Plc (AIM). In 1989, Dr. Etheridge switched from public sector research to industry and co-founded the geoscience consultancy business Etheridge Henley Williams (EHW). EHW grew to over 30 staff on three continents before it merged with the SRK Consulting group to become SRK’s Australasian business in 1997. In 2004 Dr. Etheridge left SRK Australasia, where he was chairman, to pursue a career as a professional company director in the resources and related R&D sectors. Dr. Etheridge was appointed as a director of the Company on 11 March 2011 and became Chairman on 25 July 2011. His relationship with the Company stretches back to 2004 when he was founding non-executive chairman of Geoinformatics Exploration Inc (TSX-V), from which Clancy Exploration Ltd was spun out in 2007. He is currently a member of the audit committee. Dr. Etheridge is a Fellow of the Australian Academy of Technological Sciences and Engineering, the Australian Institute of Company Directors, the Society of Economic Geologists and the Australian Institute of Geoscientists. Gordon Barnes, BSc, MSc, MAIG, MSEG, GAICD Managing Director Mr. Barnes is an exploration geologist with a background in exploration project management and technical consulting services. He has 27 years of practical experience, ranging from active field based projects through to multi-commodity project generation initiatives in Australia, Asia, North and South America. He worked as an Exploration Geologist with Freeport-McMoRan Copper & Gold Inc at the Karonie gold project in the Eastern Gold Fields. Following Freeport's merger with the Normandy-Poseidon Group in 1989, Mr. Barnes became a Project then Senior Geologist with Normandy Exploration, working on projects in the Murchison (Au), Southern Cross (Au, Ni), Eastern Gold Fields (Au), Pilbara (Au, Cu) and Kimberley (Ni, Co, Zn) regions of Western Australia. Mr. Barnes started consulting to the industry in 1996 and co-founded the Insight Geoscience Group the following year. Insight Geoscience participated in several client-sponsored project generative initiatives in Asia (Au, Cu), Australia (Zn, Cu, Pb) and North America (Zn). He has also worked on a variety of advanced database projects for multi-national clients. Mr. Barnes joined Clancy's original parent company, Geoinformatics Exploration Inc., in April 2004 to manage the Australian exploration projects and transferred to Clancy in 2007 with overall responsibility for the management of Clancy's exploration projects. Mr. Barnes graduated from Royal Melbourne Institute of Technology with a Bachelor of Science in Applied Geology in 1987 and completed a MSc in Ore Deposit Geology at the University of Western Australia in 1996. He is a Member of the Australian Institute of Geoscientists, the Society of Economic Geologists and a Graduate of the Australian Institute of Company Directors. Mr. Barnes was appointed as Managing Director on 1 January 2011. He has not held a directorship in any other listed entity in the past three years.

13

For

per

sona

l use

onl

y


3

1. Directors (continued)

Nathan Featherby, B.Comm Non-Executive Director – Appointed 23 October 2014 Mr Featherby has 10 years of investment banking and natural resource investment experience. He has previously worked as a stockbroker and independent financier in Australia with a specialisation in resources. Mr Featherby brings with him an extensive Asia/Pacific and US business development network in the global minerals sector. Mr Featherby holds a Bachelor of Commerce from Curtin University. He is Executive Chairman of Ochre Management Pty Ltd, a Western Australian merchant bank which focuses on advisory and investments in small to medium capitalisation mining and exploration companies. Mr Featherby is also executive chairman of Ochre Group Holdings Limited (ASX: OGH) and a director of Silver Mines Limited (ASX:SVL) and Ascot Resources (ASX:AZQ). Mr Featherby was appointed to the board on 23 October 2014. Mr Evan Cranston, BComm, LLB Non-Executive Director – Appointed 23 October 2014 Mr Cranston is a corporate lawyer with over 10 years experience specialising in corporate and mining law. Mr Cranston has broad experience in the areas of capital raisings, initial public offerings, tenement acquisition agreements, mineral rights agreements, joint ventures, mergers and acquisitions and corporate governance. He holds a Bachelor of Commerce and Bachelor of Laws from the University of Western Australia and was admitted as a barrister and solicitor of the Supreme Court of Western Australia. Mr Cranston is currently an executive director of Attila Resources Limited (ASX: AYA), non-executive Chairman of Boss Resources Limited (ASX:BOE), and non-executive director of ASX listed companies, Carbine Resources Limited (ASX: CRB), and Cradle Resources Limited (ASX: CXX). Mr Cranston was appointed to the board on 23 October 2014, and has been Chairman of the Audit Committee since 27 November 2014. Dr. James Macdonald, BA (Hon), MSc, PhD, PGeo, FSEG, MAICD Non-Executive Director, (Technical) – Resigned 22 October 2014 Dr. Macdonald is a geoscientist. During the past five years he has operated a New Zealand-based consultancy business which for the previous five years was Brisbane-based, providing professional geoscientific services to exploration and mining companies, mainly in Australia, Asia and Southern Africa. Dr. Macdonald has over 38 years’ experience in the global exploration and mining industries. He was Chief Geologist for AGIP Resources focused on exploration in Canada and Europe in the late 1980’s. Dr. Macdonald managed Andean gold exploration for Homestake Mining Company from 1994 to 1998. In 1998, Dr. Macdonald joined Billiton International Metals as Chief Geoscientist, based in the Netherlands. Following the merger with BHP in 2001, he relocated to Brisbane, Australia, in a similar capacity as Global Geoscience Leader. In 2008, Dr. Macdonald became a non-executive director of International Base Metals Ltd. (unlisted) based in Sydney – a position he held until October 2013. In 2009, he became a non-executive Chairman of Craton Mining and Exploration Ltd, based in Windhoek, Namibia, until October 2013. He has not held a directorship in any other listed entity in the past three years. Dr Macdonald resigned from the Company board on 22 October 2014. He was Chairman of the audit committee until his resignation from the board. Dr. Macdonald completed a Bachelor of Arts with Honours at Oxford University, majoring in Geology and Mineralogy. He subsequently completed an MSc and a PhD in Economic Geology at the University of Toronto. He is a Member of the Association of Professional Engineers and Geoscientists of British Columbia, a Fellow of the Society of Economic Geologists and a Member of the Australian Institute of Company Directors. Natalie Forsyth-Stock, B.Bus, M.Bus, GAICD Executive Director – Resigned 26 November 2014 Ms. Forsyth-Stock is an investment professional with over 20 years’ experience in investment banking and private equity investment. She was previously a Director of Allco Equity Partners Management Limited and Gresham Rabo Management Limited (both private equity managers), and the corporate advisory division of Gresham Partners Limited, where she specialised in mergers and acquisitions, fund raisings and valuations. Ms. Forsyth-Stock has a Bachelor of Business (Accounting) and a Master of Business (Banking and Finance) from the University of Technology, Sydney, a Graduate Diploma in Applied Finance and Investment and is a Graduate of the Australian Institute of Company Directors.

14

For

per

sona

l use

onl

y


3

1. Directors (continued)

Nathan Featherby, B.Comm Non-Executive Director – Appointed 23 October 2014 Mr Featherby has 10 years of investment banking and natural resource investment experience. He has previously worked as a stockbroker and independent financier in Australia with a specialisation in resources. Mr Featherby brings with him an extensive Asia/Pacific and US business development network in the global minerals sector. Mr Featherby holds a Bachelor of Commerce from Curtin University. He is Executive Chairman of Ochre Management Pty Ltd, a Western Australian merchant bank which focuses on advisory and investments in small to medium capitalisation mining and exploration companies. Mr Featherby is also executive chairman of Ochre Group Holdings Limited (ASX: OGH) and a director of Silver Mines Limited (ASX:SVL) and Ascot Resources (ASX:AZQ). Mr Featherby was appointed to the board on 23 October 2014. Mr Evan Cranston, BComm, LLB Non-Executive Director – Appointed 23 October 2014 Mr Cranston is a corporate lawyer with over 10 years experience specialising in corporate and mining law. Mr Cranston has broad experience in the areas of capital raisings, initial public offerings, tenement acquisition agreements, mineral rights agreements, joint ventures, mergers and acquisitions and corporate governance. He holds a Bachelor of Commerce and Bachelor of Laws from the University of Western Australia and was admitted as a barrister and solicitor of the Supreme Court of Western Australia. Mr Cranston is currently an executive director of Attila Resources Limited (ASX: AYA), non-executive Chairman of Boss Resources Limited (ASX:BOE), and non-executive director of ASX listed companies, Carbine Resources Limited (ASX: CRB), and Cradle Resources Limited (ASX: CXX). Mr Cranston was appointed to the board on 23 October 2014, and has been Chairman of the Audit Committee since 27 November 2014. Dr. James Macdonald, BA (Hon), MSc, PhD, PGeo, FSEG, MAICD Non-Executive Director, (Technical) – Resigned 22 October 2014 Dr. Macdonald is a geoscientist. During the past five years he has operated a New Zealand-based consultancy business which for the previous five years was Brisbane-based, providing professional geoscientific services to exploration and mining companies, mainly in Australia, Asia and Southern Africa. Dr. Macdonald has over 38 years’ experience in the global exploration and mining industries. He was Chief Geologist for AGIP Resources focused on exploration in Canada and Europe in the late 1980’s. Dr. Macdonald managed Andean gold exploration for Homestake Mining Company from 1994 to 1998. In 1998, Dr. Macdonald joined Billiton International Metals as Chief Geoscientist, based in the Netherlands. Following the merger with BHP in 2001, he relocated to Brisbane, Australia, in a similar capacity as Global Geoscience Leader. In 2008, Dr. Macdonald became a non-executive director of International Base Metals Ltd. (unlisted) based in Sydney – a position he held until October 2013. In 2009, he became a non-executive Chairman of Craton Mining and Exploration Ltd, based in Windhoek, Namibia, until October 2013. He has not held a directorship in any other listed entity in the past three years. Dr Macdonald resigned from the Company board on 22 October 2014. He was Chairman of the audit committee until his resignation from the board. Dr. Macdonald completed a Bachelor of Arts with Honours at Oxford University, majoring in Geology and Mineralogy. He subsequently completed an MSc and a PhD in Economic Geology at the University of Toronto. He is a Member of the Association of Professional Engineers and Geoscientists of British Columbia, a Fellow of the Society of Economic Geologists and a Member of the Australian Institute of Company Directors. Natalie Forsyth-Stock, B.Bus, M.Bus, GAICD Executive Director – Resigned 26 November 2014 Ms. Forsyth-Stock is an investment professional with over 20 years’ experience in investment banking and private equity investment. She was previously a Director of Allco Equity Partners Management Limited and Gresham Rabo Management Limited (both private equity managers), and the corporate advisory division of Gresham Partners Limited, where she specialised in mergers and acquisitions, fund raisings and valuations. Ms. Forsyth-Stock has a Bachelor of Business (Accounting) and a Master of Business (Banking and Finance) from the University of Technology, Sydney, a Graduate Diploma in Applied Finance and Investment and is a Graduate of the Australian Institute of Company Directors.


4

Ms. Forsyth-Stock was appointed to the board on 3 September 2012 and resigned on 26 November 2014. She was the Company’s Chief Financial Officer and a member of the Audit Committee until her resignation from the board. 1. Directors (continued)

From August 2010 until July 2013, Ms. Forsyth-Stock was a director of Bounty Mining Limited (ASX: BNT). The Company’s Audit Committee consists of three members, two of which are non-executive directors and independent and the Company Secretary. 2. Company Secretary

Rowan Caren, B.Com, CA (Company Secretary) Mr. Caren is a Chartered Accountant with over 26 years commercial experience. He has been directly involved in the minerals exploration industry for over 16 years. In 2004 he created a specialist company secretarial and advisory consultancy, Dabinett Corporate. He has provided financial and corporate services to several listed and unlisted companies involved in the resources sector. He qualified with PricewaterhouseCoopers and worked with them in Australia and overseas for six years. Mr. Caren graduated with a Bachelor of Commerce (Accounting) from the University of Western Australia and is a member of the Institute of Chartered Accountants in Australia. Mr. Caren has been a member of the Audit Committee since 27 November 2014. 3. Principal Activities

The principal activities during the year of the entities within the consolidated entity were mineral exploration and development.

4. Review of financial performance On 5 June 2014, the Company announced that its financial year end had changed from 31 December to 30 June. Accordingly, this report presents financials for the 12 month period to 30 June 2015, with comparatives for the 6 month period to 30 June 2014. The Company’s financial year end was changed to coincide with the tax year. The net consolidated loss from continuing operations for the year ended 30 June 2015, after income tax, amounted to $955,446 (six months ended 30 June 2014: $723,234). During the year ended 30 June 2015, total expenses amounted to $1,227,945 (2014: $771,568).Unrestricted cash and cash equivalents amounted to $1,231,434 as at 30 June 2015 (30 June 2014: $1,295,092). Under the terms of certain joint venture agreements, the Company has an obligation to spend $174,645 (30 June 2014: $314,582) of this cash on the respective joint venture projects, or in the event the joint venture partner does not elect to contribute beyond its minimum contribution, certain of this amount may be refunded. The Company received $750,000 from HPX on 4 June 2015 under the terms of a joint venture agreement, $525,000 of which was sequestered to be spent on the Trundle project. At 30 June 2015, expenditure of $69,062 had been incurred on the Trundle project, with the remaining $455,938 to be spent over the remaining months of 2015. 5. Dividends

No dividend has been declared or paid by the Company since the end of the previous financial year and the directors do not at present recommend a dividend. 6. Review of Operations

During the year the Company continued to explore its gold, copper and base metals projects in New South Wales and Tasmania, directly and through joint venture partners. 7. Likely Developments and Expected Results

Other than as referred to in this report, further information as to likely developments in the operations of the Company and likely results of those operations in future financial years would, in the opinion of the directors, be speculative. 8. Significant Changes in the State of Affairs

There have been no significant changes in the state of affairs during the financial year ending 30 June 2015.

15

For

per

sona

l use

onl

y


5

9. Significant Events After Balance Date

Subsequent to 30 June 2015, the Company received notice from Mitsubishi Materials Corporation (MMC) that it would not continue with formal joint ventures on the Cundumbul and Genaren projects. Both of these projects have now reverted to 100% Clancy ownership. There is no material financial effect of this joint venture cessation, as the minimum expenditure commitments for the current lease periods on the relevant tenements have been met through exploration on the projects prior to balance date. 10. Indemnity and Insurance for Group Officers and Auditors

To the extent permitted by law, the Company indemnifies every person who is or has been: • an Officer against any liability to any person (other than the Company or a related entity) incurred while acting in that capacity

and in good faith; and • an Officer or auditor of the Company, against costs and expenses incurred by that person in that capacity in successfully

defending legal proceedings and ancillary matters. The Company has in respect of any person who is or has been a director or officer of the Company paid a premium in respect of a contract insuring all directors and officers against a liability. The Company maintains insurance policies for the benefit of the relevant director or officer for the term of their appointment and for a period of seven years after retirement or resignation. The Company has entered into a Deed of Indemnity, Access and Insurance with each of its Directors and the Company Secretary. Under the Deeds of Indemnity, Access and Insurance the Company will indemnify each officer to the extent permitted by the Corporations Act against any liability arising as a result of the officer acting as an officer of the Company. The Deeds of Indemnity, Access and Insurance also provide for the right to access Board papers and other Company records. To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during, or since the end of, the financial year. 11. Remuneration Report – Audited

This report details the nature and amount of remuneration for each director of Clancy Exploration Limited and the Group, and for the executives receiving the highest remuneration in accordance with the requirements of Section 300A of the Corporations Act 2001 and its Regulations. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Act. This remuneration report forms a part of the Directors’ Report. For the purposes of this report Key Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company. Remuneration Policy

The remuneration policy of Clancy Exploration Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives. The board of Clancy Exploration Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated entity, as well as align interests of directors, executives and shareholders. In previous years shares were issued to directors, employees and consultants pursuant to the Company’s Employee Share Option and Loan Plan (“Plan”). No shares were issued in the year ended 30 June 2015. The Board believes that shares are an effective remuneration tool which preserves the cash reserves of the Company whilst providing valuable remuneration. A participant in the Plan must not sell, transfer, assign, mortgage, charge or otherwise encumber a Share issued under the Plan until the later of the following (to the extent applicable):

the repayment in full of any loan advanced by the Company to the participant contemporaneously with the issue of Shares under the Plan;

the expiry of any service continuity period specified by the Company at the time of issue of the Shares; and the satisfaction of any performance criteria specified by the Company at the time of issue of the Shares.

If an eligible employee ceases to be an eligible employee of the Company during the period of restriction the Company may buy-back the Plan Shares the subject of the restriction at a price equal to the issue price or the market price at the Board’s discretion.

16

For

per

sona

l use

onl

y


5

9. Significant Events After Balance Date

Subsequent to 30 June 2015, the Company received notice from Mitsubishi Materials Corporation (MMC) that it would not continue with formal joint ventures on the Cundumbul and Genaren projects. Both of these projects have now reverted to 100% Clancy ownership. There is no material financial effect of this joint venture cessation, as the minimum expenditure commitments for the current lease periods on the relevant tenements have been met through exploration on the projects prior to balance date. 10. Indemnity and Insurance for Group Officers and Auditors

To the extent permitted by law, the Company indemnifies every person who is or has been: • an Officer against any liability to any person (other than the Company or a related entity) incurred while acting in that capacity

and in good faith; and • an Officer or auditor of the Company, against costs and expenses incurred by that person in that capacity in successfully

defending legal proceedings and ancillary matters. The Company has in respect of any person who is or has been a director or officer of the Company paid a premium in respect of a contract insuring all directors and officers against a liability. The Company maintains insurance policies for the benefit of the relevant director or officer for the term of their appointment and for a period of seven years after retirement or resignation. The Company has entered into a Deed of Indemnity, Access and Insurance with each of its Directors and the Company Secretary. Under the Deeds of Indemnity, Access and Insurance the Company will indemnify each officer to the extent permitted by the Corporations Act against any liability arising as a result of the officer acting as an officer of the Company. The Deeds of Indemnity, Access and Insurance also provide for the right to access Board papers and other Company records. To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during, or since the end of, the financial year. 11. Remuneration Report – Audited

This report details the nature and amount of remuneration for each director of Clancy Exploration Limited and the Group, and for the executives receiving the highest remuneration in accordance with the requirements of Section 300A of the Corporations Act 2001 and its Regulations. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Act. This remuneration report forms a part of the Directors’ Report. For the purposes of this report Key Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company. Remuneration Policy

The remuneration policy of Clancy Exploration Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives. The board of Clancy Exploration Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated entity, as well as align interests of directors, executives and shareholders. In previous years shares were issued to directors, employees and consultants pursuant to the Company’s Employee Share Option and Loan Plan (“Plan”). No shares were issued in the year ended 30 June 2015. The Board believes that shares are an effective remuneration tool which preserves the cash reserves of the Company whilst providing valuable remuneration. A participant in the Plan must not sell, transfer, assign, mortgage, charge or otherwise encumber a Share issued under the Plan until the later of the following (to the extent applicable):

the repayment in full of any loan advanced by the Company to the participant contemporaneously with the issue of Shares under the Plan;

the expiry of any service continuity period specified by the Company at the time of issue of the Shares; and the satisfaction of any performance criteria specified by the Company at the time of issue of the Shares.

If an eligible employee ceases to be an eligible employee of the Company during the period of restriction the Company may buy-back the Plan Shares the subject of the restriction at a price equal to the issue price or the market price at the Board’s discretion.


6

11. Remuneration Report – Audited (continued) Loans have been advanced to the directors, executives and employees to pay the cash consideration for the Plan Shares. During the term of any such loan, dividends paid in respect of the Plan Shares in relation to which the Company made the loan will be retained by the Company as interest paid by the borrower on the loan. The borrower must repay the loan to the Company on the earlier of 5 years from the date of allotment of the Plan Shares to which the loan relates, or the date the borrower ceases to be employed by the Company. In such an event, the borrower is required to make available to the Company their Plan Shares to settle the loan. This will result in the Company meeting the loss on the loan so that the loan is effectively linked to the value of the Shares. The board’s policy for determining the nature and amount of remuneration for board members and senior executives of the consolidated entity is as follows:

The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the board.

All executives receive a base salary (which is based on factors such as length of service and experience). The Managing Director may also receive a cash bonus if certain Key Performance Indicators are met. In prior years, executives have received options to acquire ordinary shares, and one executive director was granted Shares

pursuant to the Company’s Employee Share Option and Loan Plan. An allocation of shares was made based on factors such as length of service and experience.

The board reviews executive packages annually by reference to the consolidated entity’s performance, executive performance and comparable information from industry sectors.

All remuneration paid to directors and executives is valued at the cost to the Company and is expensed over the appropriate vesting period. Options and shares issued under the Employee Share Plan are valued using the Binomial Tree methodology. Non-Executive Directors

The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Currently there is a maximum aggregate sum of $200,000 per annum, which is to be divided between the non-executive Directors in the proportions agreed between them or, failing agreement, equally. Directors are encouraged to hold shares in the Company and have been granted options in previous years. Shares were issued to non-executive directors in prior years pursuant to the Company’s Employee Share Option and Loan Plan (“Plan”) as set out above under “Remuneration Policy”. The Board believes that shares are an effective remuneration tool which preserves the cash reserves of the Company whilst providing valuable remuneration. Loans have been advanced to the non-executive directors to pay the cash consideration for the Plan Shares. Company performance, shareholder wealth and director and executive remuneration

Shares have been issued to directors and executives to encourage the alignment of personal and shareholder interests. Executive and non-executive directors, other key management personnel and other senior employees have been granted ordinary shares pursuant to the Company’s Employee Share Option and Loan Plan. The recipients of Plan Shares are responsible for growing the Company and increasing shareholder value. If they achieve this goal the value of the Plan Shares granted to them will also increase. Therefore the Plan Shares provide an incentive to the recipients to remain with the Company and to continue to work to enhance the Company's value. There is no policy in place which limits exposure to risk in relation to those securities in the Company which constitute an element of directors’ remuneration and which are linked to satisfaction of Company performance conditions.

17

For

per

sona

l use

onl

y


7

11. Remuneration Report – Audited (continued)

The table below sets out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the four years to 31 December 2013, the six months to 30 June 2014 and the year ended 30 June 2015: Consolidated Entity:

30 June 2015

30 June 2014

31 December 2013

31 December 2012

31 December 2011

31 December 2010

Revenue $272,499 $48,334 $1,305,078 $977,069 $595,420 $81,643 Net loss before tax ($955,446) ($723,234) ($677,702) ($1,931,371) ($2,325,365) ($3,119,802) Net loss after tax ($955,446) ($723,234) ($677,702) ($1,931,371) ($2,325,265) ($3,119,802) Share price at end of year1

1.5 cents 1 cent 2 cents 3 cents 5 cents 9 cents

Basic loss per share

(0.5 cents) (0.4 cents) (0.3 cents) (1.1 cents) (1.7 cents) (3.0 cents)

Diluted loss per share


Note 1: The Company was listed on the ASX on 11 July 2007. Note 2: No dividends have been declared or paid since the Company was listed.

Key Management Personnel Remuneration Policy

The remuneration structure for key management personnel, as determined by the Board, is based on a number of factors, including length of service, particular experience of the individual concerned and their role within the organisation. The contracts of service between the Company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Response to Vote Against 2014 Remuneration Report At the Company’s 2014 Annual General Meeting held in November 2014, the Company received votes against the Remuneration Report totalling greater than 25% of the votes cast by persons entitled to vote. As such the Company recorded what is known as a “first strike” under amendments to the Corporations Act 2001 which came into effect in 2011. Those shareholders who voted against the Remuneration Report did not make reference to any specific key management personnel’s remuneration. The Remuneration Report considered at the 2014 AGM detailed remuneration paid to key management personnel for the year ended 30 June 2014. The remuneration detailed in the Remuneration Report contained within the Director’s Report is for the period from 1 July 2014 to 30 June 2015. Therefore approximately five months remuneration had already been paid in the 2015 financial year prior to the First Strike being recorded. In response to the First Strike and other corporate matters, the Board notes the following events and actions taken;

In October 2014, Dr James Macdonald, a non executive director resigned. This saved the Company $36,000 pa; In November 2014, Ms Natalie Forsyth-Stock, an executive director and the Company’s Chief Financial Officer resigned. No

replacement executive director was appointed after the resignation of Ms Forsyth Stock. Ms Forsyth-Stock’s remuneration for the twelve months ended 30 June 2014 was $67,155. Ms Forsyth-Stock’s remuneration for the twelve months ended 30 June 2015 was $47,376. This represented a saving of $19,779 over the previous year. It should be noted however that a consultant Chief Financial Officer has been retained at a cost for the six months to 30 June 2015 of $38,850. This remuneration is not included in the Remuneration Report as the CFO is not considered to be key management personnel;

At the Annual General Meeting in November 2014, shareholders voted in favour of the appointment of two additional non-executive directors. This included 58,333,528 (or 98.9%) of the 58,978,278 votes lodged against the Remuneration Report;

These additional non-executive directors were appointed to the Board and are each paid a directors fee of $36,000pa; and In summary, the Company has maintained the number of directors at four, but has increased the number of non executive

directors by one (to three) and reduced the number of executive directors by one (to one). On an annualised basis comparing total remuneration paid to key management personnel for the year ended 30 June 2015 to the total remuneration paid to key management personnel for the year ended 30 June 2014, there has been a saving of $60,412 (12%).

18

For

per

sona

l use

onl

y


7


The table below sets out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the four years to 31 December 2013, the six months to 30 June 2014 and the year ended 30 June 2015: Consolidated Entity:

30 June 2015

30 June 2014

31 December 2013

31 December 2012

31 December 2011

31 December 2010

Revenue $272,499 $48,334 $1,305,078 $977,069 $595,420 $81,643 Net loss before tax ($955,446) ($723,234) ($677,702) ($1,931,371) ($2,325,365) ($3,119,802) Net loss after tax ($955,446) ($723,234) ($677,702) ($1,931,371) ($2,325,265) ($3,119,802) Share price at end of year1

1.5 cents 1 cent 2 cents 3 cents 5 cents 9 cents

Basic loss per share


Diluted loss per share


Note 1: The Company was listed on the ASX on 11 July 2007. Note 2: No dividends have been declared or paid since the Company was listed.

Key Management Personnel Remuneration Policy

The remuneration structure for key management personnel, as determined by the Board, is based on a number of factors, including length of service, particular experience of the individual concerned and their role within the organisation. The contracts of service between the Company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Response to Vote Against 2014 Remuneration Report At the Company’s 2014 Annual General Meeting held in November 2014, the Company received votes against the Remuneration Report totalling greater than 25% of the votes cast by persons entitled to vote. As such the Company recorded what is known as a “first strike” under amendments to the Corporations Act 2001 which came into effect in 2011. Those shareholders who voted against the Remuneration Report did not make reference to any specific key management personnel’s remuneration. The Remuneration Report considered at the 2014 AGM detailed remuneration paid to key management personnel for the year ended 30 June 2014. The remuneration detailed in the Remuneration Report contained within the Director’s Report is for the period from 1 July 2014 to 30 June 2015. Therefore approximately five months remuneration had already been paid in the 2015 financial year prior to the First Strike being recorded. In response to the First Strike and other corporate matters, the Board notes the following events and actions taken;

In October 2014, Dr James Macdonald, a non executive director resigned. This saved the Company $36,000 pa; In November 2014, Ms Natalie Forsyth-Stock, an executive director and the Company’s Chief Financial Officer resigned. No

replacement executive director was appointed after the resignation of Ms Forsyth Stock. Ms Forsyth-Stock’s remuneration for the twelve months ended 30 June 2014 was $67,155. Ms Forsyth-Stock’s remuneration for the twelve months ended 30 June 2015 was $47,376. This represented a saving of $19,779 over the previous year. It should be noted however that a consultant Chief Financial Officer has been retained at a cost for the six months to 30 June 2015 of $38,850. This remuneration is not included in the Remuneration Report as the CFO is not considered to be key management personnel;

At the Annual General Meeting in November 2014, shareholders voted in favour of the appointment of two additional non-executive directors. This included 58,333,528 (or 98.9%) of the 58,978,278 votes lodged against the Remuneration Report;

These additional non-executive directors were appointed to the Board and are each paid a directors fee of $36,000pa; and In summary, the Company has maintained the number of directors at four, but has increased the number of non executive

directors by one (to three) and reduced the number of executive directors by one (to one). On an annualised basis comparing total remuneration paid to key management personnel for the year ended 30 June 2015 to the total remuneration paid to key management personnel for the year ended 30 June 2014, there has been a saving of $60,412 (12%).


8


Key Management Personnel Remuneration: Remuneration for the year ended 30 June 2015

Key Management Person & Position Short-term Benefits

Long-term Benefits

Post-employment Benefits

Long term incentive

Total

Salary or Fees

$

Consulting fees

$

Non-monetary benefits2

$

Long service leave3

$ Superannuation

$

Share Based Payments

$ $

G Barnes1 Managing Director

236,810 - 18,466 2,844 21,732 - 279,852

M Etheridge Non-Executive Chairman

60,000 - - - 5,700 - 65,700

E Cranston Non-Executive Director

24,000 - - - - - 24,000

N Featherby Non-Executive Director

24,000 8,000 - - - - 32,000

J Macdonald 4 Non-Executive Director

11,032 - - - - - 11,032

N Forsyth-Stock 5 Chief Financial Officer and Executive Director

13,761 32,113 - - 1,307 195 47,376

369,603 40,113 18,466 2,844 28,739 195 459,960 1 G Barnes may receive a cash bonus which is performance related at the Board’s discretion. 2 Accrued annual leave for the year is presented on an accruals basis.

3 Long-service leave disclosed as remuneration for 2015 is presented on an accruals basis. Leave paid to Mr Barnes out of the cumulative accrued long-service leave provision amounted to $18,425 for the year. 4 J Macdonald resigned as a director of the Company on 22 October 2014, therefore his salary payment is for the period ending on the date of his resignation from the board. There were no additional termination payments made to Dr Macdonald upon resignation. 5 N Forsyth-Stock resigned as Chief Financial Officer and Executive Director of the Company on 26 November 2014, therefore payments made in respect Ms Forsyth-Stock’s services are for part of the financial year only. The director’s fees and superannuation payments are for the period ending on the date of her resignation from the board. The consulting fees paid to Ms Forsyth Stock represent the period ending 27 February 2015, of which $11,113 was paid subsequent to her resignation from the board on 26 November 2014. There were no additional termination payments made to Ms Forsyth-Stock upon resignation.

19

For

per

sona

l use

onl

y


9


Remuneration for the six months ended 30 June 2014


Long-term Benefits


Long term incentive

Total

Salary or Fees

$

Consulting fees

$

Non-monetary benefits

$

Long service leave2

$ Superannuation

$


$ $

G Barnes1 2 Managing Director

119,734 - 9,233 2,270 11,013 - 142,250


30,000 - - - 2,775 - 32,775

J Macdonald Non-Executive Director

18,006 - - - - - 18,006

N Forsyth-Stock Chief Financial Officer and executive director

16,514 48,388 - - 1,527 726 67,155

184,254 48,388 9,233 2,270 15,315 726 260,186 1 G Barnes may receive a cash bonus which is performance related at the Board’s discretion. 2 Long-service leave disclosed as remuneration for 2014 is presented on an accruals basis and has not been paid out in the period. During the financial year, the following share-based payment arrangements granted as compensation were in existence:

Plan Shares

Granted in 2015

Nil

Granted in 2014

Nil

Granted in 2013

Holder Granted

No. Grant Date

Issue Price

cents

Fair Value of Share Based Payments

(Total) $

Fair Value of Share Based Payments Expensed in 2015

$


$

Directors 264,343 16 August 2013 .093 1,471 195 726

Total 1,471 195 726

ASX listing Rule 10.14 approval for the issue of the Plan Shares in 2013 was obtained on 24 May 2013. Details of the Plan are disclosed in Remuneration Policy of this Remuneration Report. The continuity service period in relation to these shares is twelve months from the date of allotment. There were no performance criteria specified by the Company at the time of allotment. The shares issued to Ms Forsyth-Stock were fully vested prior to her resignation as a director of the Company on 26 November 2014.

20

For

per

sona

l use

onl

y


9


Remuneration for the six months ended 30 June 2014


Long-term Benefits


Long term incentive

Total

Salary or Fees

$

Consulting fees

$

Non-monetary benefits

$

Long service leave2

$ Superannuation

$


$ $

G Barnes1 2 Managing Director

119,734 - 9,233 2,270 11,013 - 142,250


30,000 - - - 2,775 - 32,775

J Macdonald Non-Executive Director

18,006 - - - - - 18,006

N Forsyth-Stock Chief Financial Officer and executive director

16,514 48,388 - - 1,527 726 67,155

184,254 48,388 9,233 2,270 15,315 726 260,186 1 G Barnes may receive a cash bonus which is performance related at the Board’s discretion. 2 Long-service leave disclosed as remuneration for 2014 is presented on an accruals basis and has not been paid out in the period. During the financial year, the following share-based payment arrangements granted as compensation were in existence:

Plan Shares

Granted in 2015

Nil

Granted in 2014

Nil

Granted in 2013

Holder Granted

No. Grant Date

Issue Price

cents

Fair Value of Share Based Payments

(Total) $


$


$

Directors 264,343 16 August 2013 .093 1,471 195 726

Total 1,471 195 726

ASX listing Rule 10.14 approval for the issue of the Plan Shares in 2013 was obtained on 24 May 2013. Details of the Plan are disclosed in Remuneration Policy of this Remuneration Report. The continuity service period in relation to these shares is twelve months from the date of allotment. There were no performance criteria specified by the Company at the time of allotment. The shares issued to Ms Forsyth-Stock were fully vested prior to her resignation as a director of the Company on 26 November 2014.


10


Options Granted as Part of Remuneration for the year ended 30 June 2015 No options were issued to directors as part of their remuneration during the course of the year ended 30 June 2015. No options were exercised, or forfeited during the year. There were no options on issue as at 30 June 2015. There were no options on issue during the six months ended 30 June 2014.

The movement during the reporting period in the number of ordinary shares of Clancy Exploration Limited held directly, indirectly or beneficially, by each specified director and each specified executive, including their personally related entities is as follows:

(i) SHARES – 30 June 2015

Held at 1 July 2014

Granted as Remuneration

On Exercise

of Options

Acquired Net Change Held at 30 June 2015

Director G Barnes 2,457,547 - - 1,000,000 1,000,000 3,457,547 M Etheridge 3,214,863 - - 1,000,000 1,000,000 4,214,863 J Macdonald 1,307,533 - - - - 1,307,533 N Forsyth-Stock 611,352 - -

- - 611,352

E Cranston - - - - - - N Featherby 1,000,000 - - - - 1,000,000 8,591,295 - - 2,000,000 2,000,000 10,591,295

(i) SHARES – 30 June 2014

Held at 1 January 2014

Granted as Remuneration

On Exercise

of Options

Acquired Net Change Held at 30 June 2014

Director G Barnes 2,457,547 - - - - 2,457,547 M Etheridge 3,214,863 - - - - 3,214,863 J Macdonald 1,307,533 - - - - 1,307,533 N Forsyth-Stock 611,352 - -

- - 611,352

7,591,295 - - - - 7,591,295

Details of share-based payments in existence during the year ended 30 June 2015 are disclosed in this Directors’ Report and Notes 18, 26 and 27 to the Annual Financial Statements.

21

For

per

sona

l use

onl

y


11


Contracts with Directors and Key Management Personnel Gordon Barnes The key provisions of the contract with Gordon Barnes (Managing Director) are as follows:

Contract Duration Rolling contract Notice Period for Termination and Termination Payments

Mr Barnes’ remuneration is subject to an annual review undertaken by the Board of Directors. Mr Barnes may receive a discretionary performance-based cash bonus of up to 25% of his gross salary if in the opinion of the Board certain Key Performance Indicator measures are met. Mr Barnes may terminate his employment by providing 3 months’ notice in writing. The Company may terminate Mr Barnes’ employment, for reasons other than serious misconduct, by providing 3 months’ notice or providing payment in lieu of this notice period. The Company may immediately terminate Mr Barnes’ employment for reasons of serious misconduct.

� 12. Auditor Independence and Non-Audit Services

During the year, Ernst and Young, the Group’s auditor, performed certain services in addition to its statutory audit duties. The total non-audit services provided by the external auditor amounted to $9,800 (six months ended 30 June 2014: $9,500). The Board of Directors is satisfied that the provision of non-audit services by the external auditor did not compromise the auditor independence requirements of the act due to the following reasons:

1) all material non-audit services have been reviewed and approved by the Board of Directors prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; 2) none of the services undermines the general principles relating to auditors independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing and auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing economic risks and rewards.

13. Auditors’ Independence Declaration

The auditors’ independence declaration for the reporting period ended 30 June 2015 has been received and can be found on page 24. 14. Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors support and have adhered to the principles of corporate governance. The Company’s corporate governance statement is available on the website, www.clancyexporation.com . 15. Share Options

At the date of this report nil options to acquire ordinary shares in Clancy Exploration Limited were on issue. Share-based payments and options issued to directors, consultants and eligible employees, are disclosed in this Directors’ Report and Notes 18, 26 and 27 to the Annual Financial Statement. Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate.

22

For

per

sona

l use

onl

y


11


Contracts with Directors and Key Management Personnel Gordon Barnes The key provisions of the contract with Gordon Barnes (Managing Director) are as follows:

Contract Duration Rolling contract Notice Period for Termination and Termination Payments

Mr Barnes’ remuneration is subject to an annual review undertaken by the Board of Directors. Mr Barnes may receive a discretionary performance-based cash bonus of up to 25% of his gross salary if in the opinion of the Board certain Key Performance Indicator measures are met. Mr Barnes may terminate his employment by providing 3 months’ notice in writing. The Company may terminate Mr Barnes’ employment, for reasons other than serious misconduct, by providing 3 months’ notice or providing payment in lieu of this notice period. The Company may immediately terminate Mr Barnes’ employment for reasons of serious misconduct.

� 12. Auditor Independence and Non-Audit Services

During the year, Ernst and Young, the Group’s auditor, performed certain services in addition to its statutory audit duties. The total non-audit services provided by the external auditor amounted to $9,800 (six months ended 30 June 2014: $9,500). The Board of Directors is satisfied that the provision of non-audit services by the external auditor did not compromise the auditor independence requirements of the act due to the following reasons:

1) all material non-audit services have been reviewed and approved by the Board of Directors prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; 2) none of the services undermines the general principles relating to auditors independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing and auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing economic risks and rewards.

13. Auditors’ Independence Declaration

The auditors’ independence declaration for the reporting period ended 30 June 2015 has been received and can be found on page 24. 14. Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors support and have adhered to the principles of corporate governance. The Company’s corporate governance statement is available on the website, www.clancyexporation.com . 15. Share Options

At the date of this report nil options to acquire ordinary shares in Clancy Exploration Limited were on issue. Share-based payments and options issued to directors, consultants and eligible employees, are disclosed in this Directors’ Report and Notes 18, 26 and 27 to the Annual Financial Statement. Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate.


12

16. Directors’ Meetings

The number of meetings of directors (including meetings of committees of directors) held during the year ended 30 June 2015 and the number of meetings attended by each director was as follows:

Director Directors’ Meetings Eligible to

Attend

Directors’ Meetings Attended

Audit Committee Meetings Eligible to

Attend

Audit Committee Meetings Attended

G Barnes 8 8 - - M Etheridge 8 8 2 2 J Macdonald 2 2 1 1 N Forsyth-Stock 2 2 1 1 N Featherby 6 6 - - E Cranston 6 6 1 -

17. Risk Management

The Company takes a proactive approach to risk management including monitoring actual performance against budgets and forecast and monitoring investment performance. The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that the consolidated entity’s objectives and activities are aligned with the risks and opportunities identified by the Board. 18. Environmental Regulations and Performance

The Company is required to carry out the exploration and evaluation of its mining tenements in accordance with various State Government Acts and Regulations. In regard to environmental considerations, the Company is required to obtain approval from various State regulatory authorities before any exploration requiring ground disturbance, such as line clearing, drilling programs and costeaning is carried out. It is normally a condition of such regulatory approval that any area of ground disturbed during the Company’s activities is rehabilitated in accordance with various guidelines. There have been no significant breaches of these guidelines.

This report is made in accordance with a resolution of the directors.

G.J. Barnes Managing Director Signed at Orange, NSW 18 September 2015

23

For

per

sona

l use

onl

y

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

13

680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au

Auditor’s Independence Declaration to the Directors of Clancy Exploration Limited

In relation to our audit of the financial report of Clancy Exploration Limited for the year ended 30 June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young Ryan Fisk Partner Sydney 18 September 2015

24

For

per

sona

l use

onl

y


14

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015

Consolidated

12 months ended 30 June 2015

6 months ended 30 June 2014

Notes $ $ Income Other income 4 272,499 48,334 Total Income 272,499 48,334

Employee benefits expense 5(a) (857,251) (486,398) Consulting and outsourced services expense (233,258) (233,723) Self-funded exploration expenditure (135,299) (124,109) Net recovery from joint venture partners 5(b) 344,211 150,108 Travel expense (24,039) (23,223) Share based payment expense 27(a) (195) (726) Computer related costs (925) (413) Occupancy costs (8,824) (4,301) Insurance expense (25,031) (12,647) Marketing expense (1,750) (913) Depreciation, amortisation and impairment expense 5(c) (11,444) (14,170) Impairment of exploration asset 13 (250,000) - Other expenses (24,140) (21,053) Total expenses (1,227,945) (771,568) Loss from continuing operations before income tax benefit (955,446) (723,234) Income tax benefit 6 - - Loss from continuing operations after tax for the period (955,446) (723,234) Other comprehensive income: Other comprehensive Income - - Other comprehensive income/(loss) net of tax Total comprehensive loss attributable to owners of the parent (955,446) (723,234) Basic and diluted loss per share (cents per share) 7 (0.5 cents) (0.4 cents)

The accompanying notes form part of these financial statements on pages 29 to 62.

25

For

per

sona

l use

onl

y


15

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015

Consolidated

2015 2014

Notes $ $

ASSETS

Current Assets

Cash and cash equivalents 8 1,231,434 1,295,092 Restricted cash asset 8 210,000 300,000 Trade and other receivables 9 101,206 88,965 Reimbursable exploration expenditure 10 19,821 - Total Current Assets 1,562,461 1,684,057 Non-Current Assets

Plant and equipment 11 34,758 53,694 Intangible assets 12 995 2,715 Exploration asset 13 - 400,000 Total Non-Current Assets

35,753 456,409

TOTAL ASSETS 1,598,214 2,140,466

LIABILITIES

Current Liabilities

Trade and other payables 14 114,778 228,230 Provisions 15 59,121 103,221 Unearned revenue 16 3,171 32,821 Exploration expenditure funded in advance 16 174,645 314,582 Total Current Liabilities

351,715 678,854

Non-Current Liabilities Provisions 15 18,350 28,017 Total Non-Current Liabilities

18,350 28,017

TOTAL LIABILITIES

370,065

706,871

NET ASSETS

1,228,149 1,433,595

EQUITY

Contributed equity 17 15,207,200 14,457,200 Reserves 18 1,665,605 1,665,605 Accumulated losses (15,644,656) (14,689,210) TOTAL EQUITY

1,228,149 1,433,595

The accompanying notes set out on pages 29 to 62 form part of these financial statements.

26

For

per

sona

l use

onl

y


15

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015

Consolidated

2015 2014

Notes $ $

ASSETS

Current Assets

Cash and cash equivalents 8 1,231,434 1,295,092 Restricted cash asset 8 210,000 300,000 Trade and other receivables 9 101,206 88,965 Reimbursable exploration expenditure 10 19,821 - Total Current Assets 1,562,461 1,684,057 Non-Current Assets

Plant and equipment 11 34,758 53,694 Intangible assets 12 995 2,715 Exploration asset 13 - 400,000 Total Non-Current Assets

35,753 456,409

TOTAL ASSETS 1,598,214 2,140,466

LIABILITIES

Current Liabilities

Trade and other payables 14 114,778 228,230 Provisions 15 59,121 103,221 Unearned revenue 16 3,171 32,821 Exploration expenditure funded in advance 16 174,645 314,582 Total Current Liabilities

351,715 678,854

Non-Current Liabilities Provisions 15 18,350 28,017 Total Non-Current Liabilities

18,350 28,017

TOTAL LIABILITIES

370,065

706,871

NET ASSETS

1,228,149 1,433,595

EQUITY

Contributed equity 17 15,207,200 14,457,200 Reserves 18 1,665,605 1,665,605 Accumulated losses (15,644,656) (14,689,210) TOTAL EQUITY

1,228,149 1,433,595



16

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015

CONSOLIDATED

Notes

Ordinary Shares

Share based payment Reserve

Accumulated Losses

Total Equity

$ $ $ $ At 1 July 2014 14,457,200 1,665,605 (14,689,210) 1,433,595 Total comprehensive income for the period, net of tax - - (955,446) (955,446) Transaction costs on share issues 17 - - - - Issue of share capital 17 750,000 - - 750,000 Share based payment - employee, directors and consultants shares

17 - - - -

At 30 June 2015 15,207,200 1,665,605 (15,644,656) 1,228,149

At 1 January 2014 14,457,200 1,660,974 (13,965,976) 2,152,198 Total comprehensive income for the period, net of tax - - (723,234) (723,234) Transaction costs on share issues 17 - - - - Issue of share capital 17 - - - - Share based payment - employee, directors and consultants shares

17 - 4,631 - 4,631

At 30 June 2014 14,457,200 1,665,605 (14,689,210) 1,433,595


27

For

per

sona

l use

onl

y


17

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015

Consolidated 12 months

ended 30 June 2015

6 months ended 30 June

2014 Notes $ $

CASH FLOWS USED IN OPERATING ACTIVITIES Reimbursement of exploration expenditure 2,073,905 700,280 Management fee received 177,144 139,598 Payments to suppliers and employees (3,519,803) (1,268,778) Receipts of Government grants for drilling expenditure 16 142,404 - Interest received 29,108 20,928

NET CASH FLOWS USED IN OPERATING ACTIVITIES 19 (1,097,242) (407,972)

CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES

Purchase of plant and equipment (16,628) (2,100) Proceeds on sale of property, plant and equipment 4 60,455 Prepayment on acquisition of tenements 13 - (150,000) Refund of prepayment on acquisition of tenements 13 150,000 - Release of cash from security deposits 8 90,000 - NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES 283,827 (152,100)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of shares 17 750,000 4,631 Loans to related entity - payments made (243) (236)

NET CASH FLOWS FROM FINANCING ACTIVITIES 749,757 4,395 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

(63,658) (555,677)

Cash and cash equivalents at beginning of period 1,295,092 1,850,769

CASH AND CASH EQUIVALENTS AT END OF PERIOD 8 1,231,434 1,295,092


28

For

per

sona

l use

onl

y


17

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015


ended 30 June 2015

6 months ended 30 June

2014 Notes $ $

CASH FLOWS USED IN OPERATING ACTIVITIES Reimbursement of exploration expenditure 2,073,905 700,280 Management fee received 177,144 139,598 Payments to suppliers and employees (3,519,803) (1,268,778) Receipts of Government grants for drilling expenditure 16 142,404 - Interest received 29,108 20,928

NET CASH FLOWS USED IN OPERATING ACTIVITIES 19 (1,097,242) (407,972)

CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES

Purchase of plant and equipment (16,628) (2,100) Proceeds on sale of property, plant and equipment 4 60,455 Prepayment on acquisition of tenements 13 - (150,000) Refund of prepayment on acquisition of tenements 13 150,000 - Release of cash from security deposits 8 90,000 - NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES 283,827 (152,100)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of shares 17 750,000 4,631 Loans to related entity - payments made (243) (236)

NET CASH FLOWS FROM FINANCING ACTIVITIES 749,757 4,395 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

(63,658) (555,677)

Cash and cash equivalents at beginning of period 1,295,092 1,850,769

CASH AND CASH EQUIVALENTS AT END OF PERIOD 8 1,231,434 1,295,092


Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 NOTES TO ACCOUNTS

18

1. CORPORATE INFORMATION

The financial statements of Clancy Exploration Limited (the Company or the Group) for the year ended 30 June 2015 were authorised for issue in accordance with a resolution of the directors on 18 September 2015. Clancy Exploration Limited is a for profit entity.

Clancy Exploration Limited (the parent) is a company limited by shares, incorporated in Australia, and whose shares are publicly traded on the Australian Securities Exchange.

The nature of the operations and principal activities of the consolidated entity are described in the Directors' Report.

On 5 June 2014, the Company announced that its financial year end had changed from 31 December to 30 June.

The Company’s financial year end was changed to coincide with the tax year. This report presents financials for the 12 month period to 30 June 2015, with comparatives for the 6 month period to 30 June 2014. Accordingly, in the Statement of Comprehensive Income the 12 months ended 30 June 2015 is not directly comparable with the 6 months ended 30 June 2014.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements include separate financial statements for Clancy Exploration Limited as an individual entity and the consolidated entity consisting of Clancy Exploration Limited and its controlled entity.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. These financial statements have also been prepared on a historical cost basis, except for available-for-sale investments, which have been measured at fair value.

These financial statements are presented in Australian dollars.

Going Concern For the year ended 30 June 2015, the consolidated entity has incurred a net loss after income tax of $955,446 (six months ended 30 June 2014: $723,234), experienced net cash outflows from operations of $1,097,242 (six months ended 30 June 2014: $407,972), net cash inflows from investing activities of $283,827 (six months ended 30 June 2014: outflow of $152,100), and net cash inflows from financing activities of $749,757 (six months ended 30 June 2014: $4,395). As at 30 June 2015, the consolidated entity had cash and cash equivalents of $1,231,434 (at 30 June 2014: $1,295,092). The ability of the Company and the consolidated entity to continue as going concerns is principally dependent upon: Joint venture partners continuing to expend funds and pay management fees on the Company’s projects; Reduction of planned expenditures; and/or Raising additional capital to fund exploration and provide additional working capital.

The dependence of the Company and consolidated entity on the above indicates a material uncertainty that may cast significant doubt about the Company and the consolidated entity’s ability to continue as going concerns. The directors are however satisfied that they will achieve the matters set out above and therefore the going concern basis of preparation is appropriate. The financial report has therefore been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

29

For

per

sona

l use

onl

y


19

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Should the Company and the consolidated entity be unable to achieve the initiatives referred to above, there is a material uncertainty whether the Company and the consolidated entity will be able to continue as going concerns and, therefore, whether they will realise their assets and discharge their liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts and classification of liabilities that might be necessary should the Company and the consolidated entity not continue as going concerns.

(b) Statement of Compliance

These financial statements comply with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law.

(c) New accounting standards and interpretations

(A) Changes in accounting policy and disclosure

From 1 July 2014 the Group has adopted all standards and interpretations, mandatory for annual reporting

periods beginning 1 July 2014. Adoption of these standards and interpretations did not have any effect on the financial position or performance of the Group.

Reference Title Application date for the Group

Impact on the Group

AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities

1 July 2014 No significant impact on the Group.

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets


AASB 1031 Materiality 1 July 2014 No significant impact on the Group.

AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments


AASB 2014-1 Part A -Annual Improvements 2010–2012 Cycle

AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting Standards arising from the issuance by the International Accounting Standards Board (IASB) of International Financial Reporting Standards (IFRSs) Annual Improvements to IFRSs 2010–2012 Cycle and Annual Improvements to IFRSs 2011–2013 Cycle.


30

For

per

sona

l use

onl

y


19


Should the Company and the consolidated entity be unable to achieve the initiatives referred to above, there is a material uncertainty whether the Company and the consolidated entity will be able to continue as going concerns and, therefore, whether they will realise their assets and discharge their liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts and classification of liabilities that might be necessary should the Company and the consolidated entity not continue as going concerns.

(b) Statement of Compliance

These financial statements comply with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law.

(c) New accounting standards and interpretations

(A) Changes in accounting policy and disclosure

From 1 July 2014 the Group has adopted all standards and interpretations, mandatory for annual reporting

periods beginning 1 July 2014. Adoption of these standards and interpretations did not have any effect on the financial position or performance of the Group.


Impact on the Group

AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities


AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets


AASB 1031 Materiality 1 July 2014 No significant impact on the Group.

AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments



AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting Standards arising from the issuance by the International Accounting Standards Board (IASB) of International Financial Reporting Standards (IFRSs) Annual Improvements to IFRSs 2010–2012 Cycle and Annual Improvements to IFRSs 2011–2013 Cycle.



20



Impact on the Group


Annual Improvements to IFRSs 2011–2013 Cycle addresses the following items:

► AASB 13

► AASB 140


Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements [AASB 1053]

The Standard makes amendments to AASB 1053 Application of Tiers of Australian Accounting Standards


(B) Accounting Standards issued but not yet effective The following Australian Accounting Standards and Interpretations that have recently been issued but are not yet effective have not been adopted by the Group for the annual reporting period ending 30 June 2015. None of the standards issued and not yet effective are expected to have a significant impact to the financial statements unless specifically stated below. Those that are relevant to the Group are outlined below:

Reference Title Application date for Group

Impact on the Group

AASB 9 Financial Instruments 1 July 2018 The revised standard is not expected to have a significant impact on the classification and measurement of financial assets or financial liabilities.

AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & AASB 11]

1 July 2016 The revised standard is not expected to have a significant impact on the Company.

AASB 15 Revenue from Contracts with Customers

1 July 2017

The revised standard is not expected to have a significant impact on the Company.

AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements

1 July 2016 Amendments to the relevant standards are not expected to have a significant impact on the Company.

AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

1 July 2016 Amendments to the relevant standards are not expected to have a significant impact on the Company.

AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101


AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality


31

For

per

sona

l use

onl

y


21

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

(e) Investment in joint operations

A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses. The Group can elect to contribute to ongoing exploration costs in proportion to its interests or dilute (a farm-out arrangement). If contributions are made during the reporting period, they are accounted for as exploration expenditure. Once the joint arrangement partner had earned its interest, the Company recovers expenditure equivalent to the other joint arrangement partner’s interest. The Group does not record any expenditure made by the farminee on its account. It also does not recognise any gain or loss on its exploration and evaluation farm-out arrangements. Any cash consideration received directly from the farminee is credited against costs previously incurred in relation to the whole interest. When the Group, acting as an operator, receives reimbursement of direct costs recharged to the joint operation, such recharges represent reimbursements of costs that the operator incurred as an agent for the joint operation and therefore have no effect on profit or loss. In many cases, the Group also incurs certain general overhead expenses in carrying out activities on behalf of the joint operation. As these costs can often not be specifically identified, joint operation agreements allow the operator to recover the general overhead expenses incurred by charging an overhead fee that is based on a fixed percentage of the total costs incurred for the year, often in the form of a management fee. Although the purpose of this recharge is very similar to the reimbursement of direct costs, the Group is not acting as an agent in this case. Therefore, the general overhead expenses and the overhead fee are recognised in profit or loss as an expense and income, respectively.

32

For

per

sona

l use

onl

y


21

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

(e) Investment in joint operations

A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses. The Group can elect to contribute to ongoing exploration costs in proportion to its interests or dilute (a farm-out arrangement). If contributions are made during the reporting period, they are accounted for as exploration expenditure. Once the joint arrangement partner had earned its interest, the Company recovers expenditure equivalent to the other joint arrangement partner’s interest. The Group does not record any expenditure made by the farminee on its account. It also does not recognise any gain or loss on its exploration and evaluation farm-out arrangements. Any cash consideration received directly from the farminee is credited against costs previously incurred in relation to the whole interest. When the Group, acting as an operator, receives reimbursement of direct costs recharged to the joint operation, such recharges represent reimbursements of costs that the operator incurred as an agent for the joint operation and therefore have no effect on profit or loss. In many cases, the Group also incurs certain general overhead expenses in carrying out activities on behalf of the joint operation. As these costs can often not be specifically identified, joint operation agreements allow the operator to recover the general overhead expenses incurred by charging an overhead fee that is based on a fixed percentage of the total costs incurred for the year, often in the form of a management fee. Although the purpose of this recharge is very similar to the reimbursement of direct costs, the Group is not acting as an agent in this case. Therefore, the general overhead expenses and the overhead fee are recognised in profit or loss as an expense and income, respectively.


22


(f) Business combinations Business combinations are accounted for using the acquisition method. The consideration transferred in a

business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair value of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate

classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held

equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition

date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured.

(g) Segment reporting

Management has assessed that the Company’s reportable business segments under the quantitative criteria set out in AASB 8 Segment Reporting and has determined that no additional operating segments disclosures are required.

AASB 8 requires the ‘management approach’ to the identification, measurement and disclosure of operating segments. The ‘management approach’ requires that operating segments be identified on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker, for the purpose of allocating resources and assessing performance. This could also include the identification of operating segments which sell primarily or exclusively to other internal operating segments.

In its adoption of the ‘management approach’ to segment reporting, the Company has identified that it continues

to operate as a gold, copper and base metals explorer and developer, in a single reportable business segment, under one segment manager, in one geographical location being Australia, consistent with the prior year. The information disclosed in the financial statements is the same information utilised internally by the chief operating decision maker. Accordingly no additional quantitative or qualitative disclosures are required.

(h) Foreign currency translation

(i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Australian dollars, which is Clancy Exploration Limited’s functional and presentation currency. (ii) Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

33

For

per

sona

l use

onl

y


23


(i) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term deposits

with an original maturity of not more than 3 months that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above. The consolidated entity does not have any bank overdraft facilities.

Where the Company calls cash in advance from its joint venture partners, the cash is recognised as an asset with an offsetting liability for the amount of expenses not yet incurred on the relevant joint venture project at balance date. The liability is then released to the profit and loss as the expenditure is incurred.

Restricted cash represents the cash funds held in term deposit accounts for exploration licenses for a period longer than 3 months but shorter than 12 months. The Department of Trade and Investment, Regional Infrastructure and Services requires the Company to lodge a security deposit in respect of each of its exploration leases granted over tenements held in the Company’s name. These funds are held as a Deed of Security Deposit Bond entered into on behalf of the Company by a financial institution. The amount of restricted cash required to be held as a security deposit varies from time to time depending on the requirements of the tenements leased. The deposits must remain in place until the Company determines that the relevant exploration lease should be relinquished.

(j) Trade and other receivables Trade receivables are generally paid on 30 day settlement terms and are recognised and carried at original invoice

amount less an allowance for impairment. Trade receivables are non-interest bearing. Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be

uncollectible are written off when identified. An impairment provision would be recognised when legal notice has been sent and a reply not received within 30 days.

(k) Investments and other financial assets Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement

are categorised as either financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Designation is re-evaluated at each financial year end, but there are restrictions on reclassifying to other categories.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at

fair value through profit and loss, directly attributable transaction costs. Recognition and Derecognition All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the

consolidated entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets.

(i) Loans and receivables Loans and receivables including loan notes are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. Such assets are carried at the transaction price minus principal repayments and minus any allowance for impairment or uncollectability. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. Loans and receivables are included with receivables in current assets in the statement of financial position, except for those with maturities greater than 12 months after balance date, which are classified as non-current. Loans and receivables with maturities greater than 12 months are carried at amortised cost using the effective interest rate method.

34

For

per

sona

l use

onl

y


23


(i) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term deposits

with an original maturity of not more than 3 months that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above. The consolidated entity does not have any bank overdraft facilities.

Where the Company calls cash in advance from its joint venture partners, the cash is recognised as an asset with an offsetting liability for the amount of expenses not yet incurred on the relevant joint venture project at balance date. The liability is then released to the profit and loss as the expenditure is incurred.

Restricted cash represents the cash funds held in term deposit accounts for exploration licenses for a period longer than 3 months but shorter than 12 months. The Department of Trade and Investment, Regional Infrastructure and Services requires the Company to lodge a security deposit in respect of each of its exploration leases granted over tenements held in the Company’s name. These funds are held as a Deed of Security Deposit Bond entered into on behalf of the Company by a financial institution. The amount of restricted cash required to be held as a security deposit varies from time to time depending on the requirements of the tenements leased. The deposits must remain in place until the Company determines that the relevant exploration lease should be relinquished.

(j) Trade and other receivables Trade receivables are generally paid on 30 day settlement terms and are recognised and carried at original invoice

amount less an allowance for impairment. Trade receivables are non-interest bearing. Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be

uncollectible are written off when identified. An impairment provision would be recognised when legal notice has been sent and a reply not received within 30 days.

(k) Investments and other financial assets Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement

are categorised as either financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Designation is re-evaluated at each financial year end, but there are restrictions on reclassifying to other categories.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at

fair value through profit and loss, directly attributable transaction costs. Recognition and Derecognition All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the

consolidated entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets.

(i) Loans and receivables Loans and receivables including loan notes are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. Such assets are carried at the transaction price minus principal repayments and minus any allowance for impairment or uncollectability. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. Loans and receivables are included with receivables in current assets in the statement of financial position, except for those with maturities greater than 12 months after balance date, which are classified as non-current. Loans and receivables with maturities greater than 12 months are carried at amortised cost using the effective interest rate method.


24


(ii) Available-for-sale securities Available-for-sale investments are those non-derivative financial assets, principally equity securities that are

designated as available-for-sale or are not classified as any of the following categories: financial assets at fair value through profit or loss, held-to-maturity investments or loans and receivables. After initial recognition available-for-sale securities are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the reporting date. For investments with no active market, fair values are determined using valuation techniques. Such techniques include: using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible and keeping judgmental inputs to a minimum.

(iii) Financial assets carried at cost Investments are initially measured at fair value, net of transaction costs. Subsequent to initial recognition, investments in subsidiaries are measured at cost in the Company financial statements. If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured), the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset.

(l) Intangibles and Impairment of non-financial assets other than that of goodwill Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset. (i) Impairment Intangible assets other than goodwill and indefinite life intangibles are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The consolidated entity conducts an annual internal review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of the asset’s fair value less costs to sell and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that were impaired are tested for possible reversal of the impairment when events or changes in circumstances indicate that the impairment may have reversed.

35

For

per

sona

l use

onl

y


25

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (ii) Derecognition and disposal Any gain or loss arising on derecognition of an intangible asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.

(m) Plant and Equipment

Plant and equipment is stated at historical cost less depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of these items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation is calculated using the straight line and diminishing value methods to allocate the cost of the specific assets over their estimated useful lives. The expected useful lives are detailed in Note 11. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end. (i) Impairment The carrying values of plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The directors have determined that items of plant and equipment do not generate independent cash inflows and that the business of the consolidated entity is, in its entirety, a cash-generating unit. The recoverable amount of plant and equipment is thus determined to be its fair value less costs to sell. An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of comprehensive income as an expense. (ii) Derecognition and disposal An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income. When revalued assets are sold, it is consolidated entity policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(n) Trade and other payables Trade payables and other payables are carried at the transaction price minus principal repayments. They

represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year that are unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(o) Provisions and employee benefits Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result

of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the consolidated entity expects some or all of a provision to be reimbursed, for example under an

insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.

36

For

per

sona

l use

onl

y


25

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (ii) Derecognition and disposal Any gain or loss arising on derecognition of an intangible asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.

(m) Plant and Equipment

Plant and equipment is stated at historical cost less depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of these items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation is calculated using the straight line and diminishing value methods to allocate the cost of the specific assets over their estimated useful lives. The expected useful lives are detailed in Note 11. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end. (i) Impairment The carrying values of plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The directors have determined that items of plant and equipment do not generate independent cash inflows and that the business of the consolidated entity is, in its entirety, a cash-generating unit. The recoverable amount of plant and equipment is thus determined to be its fair value less costs to sell. An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of comprehensive income as an expense. (ii) Derecognition and disposal An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income. When revalued assets are sold, it is consolidated entity policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(n) Trade and other payables Trade payables and other payables are carried at the transaction price minus principal repayments. They

represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year that are unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(o) Provisions and employee benefits Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result

of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the consolidated entity expects some or all of a provision to be reimbursed, for example under an

insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.


26


Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date using a discounted cash flow methodology. The risks specific to the provision are factored into the cash flows and as such a risk-free corporate bond rate relative to the expected life of the provision is used as a discount rate. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

Employee leave benefits (i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled with 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. Liabilities for annual leave expected to be settled within 12 months of the reporting date are recognised in the current provision for the employee benefits. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. For annual leave, expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(ii) Long Service Leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(p) Share-based payment transactions (i) Equity settled transactions: The consolidated entity provides benefits to its directors, employees and consultants in the form of share-based

payments, whereby directors and employees render services in exchange for options to acquire shares, rights over shares (equity-settled transactions) and shares issued pursuant to the Company’s Employee Share and Loan Plan (“Plan”). The consolidated entity has also issued ordinary shares and unlisted options as consideration to vendors for the acquisition of exploration licences and drilling services.

The cost of these equity-settled transactions is measured by reference to the fair value to the Company of the equity instruments at the date at which they were granted in the case of options and shares issued under the Plan for directors, employees and consultants; and the closing share price on, or just before, either the date of entering into, or executing, an exploration licence purchase agreement in the case of options and shares issued to tenement vendors as consideration for the settlement price. The fair value of the unlisted options and shares issued under the Plan is determined using the Black-Scholes model, taking into account the terms and conditions upon which the options were granted.

The cost of equity-settled transactions is recognised as an expense, together with a corresponding increase in equity over the period in which the vesting and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant directors and employees become fully entitled to the options (the vesting date) or shares issued under the Plan.

At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income reflects:

(i) the grant date fair value of the options and shares issued under the Plan;

(ii) the current best estimate of the number of options and shares issued under the Plan that will ultimately vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of vesting conditions being met, based on best available information at balance date; and

(iii) the extent to which the vesting period has expired.

The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity.

37

For

per

sona

l use

onl

y


27


If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options and shares issued under the Plan is reflected as additional share dilution in the computation of diluted earnings per share.

(q) Issued Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(r) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Rendering of Services Where the work performed in relation to a joint venture or other contract outcome can be reliably measured: - right to receive compensation for the services provided and the stage of completion can be reliably

measured. Stage of completion is measured by reference to the labour hours performed to date as a percentage of total estimated labour hours in relation to a joint venture or for each contract. Where it is probable that a loss will arise in relation to a joint venture or from a contract, the excess of total costs over revenue is recognised as an expense immediately.

Where the contract outcome cannot be reliably measured:

- revenue is recognised only to the extent that the costs that have been incurred are recoverable. Unearned income is recognised in respect of progress billings and advances on exploration contracts in progress, received in advance, or not represented by work done or reimbursable expenditure incurred, under joint venture arrangements. Such income is recognised and brought to account over time as it is earned.

(ii) Interest revenue Revenue is recognised as interest accrued using the effective interest method. This is a method of calculating the amortised costs of a financial asset and allocating the interest revenue over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

All revenue is stated net of Goods and Services Tax (“GST”).

(s) Income tax and other taxes Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets, liabilities and their carrying amounts for financial statements purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised.

38

For

per

sona

l use

onl

y


27


If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options and shares issued under the Plan is reflected as additional share dilution in the computation of diluted earnings per share.

(q) Issued Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(r) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Rendering of Services Where the work performed in relation to a joint venture or other contract outcome can be reliably measured: - right to receive compensation for the services provided and the stage of completion can be reliably

measured. Stage of completion is measured by reference to the labour hours performed to date as a percentage of total estimated labour hours in relation to a joint venture or for each contract. Where it is probable that a loss will arise in relation to a joint venture or from a contract, the excess of total costs over revenue is recognised as an expense immediately.

Where the contract outcome cannot be reliably measured:

- revenue is recognised only to the extent that the costs that have been incurred are recoverable. Unearned income is recognised in respect of progress billings and advances on exploration contracts in progress, received in advance, or not represented by work done or reimbursable expenditure incurred, under joint venture arrangements. Such income is recognised and brought to account over time as it is earned.

(ii) Interest revenue Revenue is recognised as interest accrued using the effective interest method. This is a method of calculating the amortised costs of a financial asset and allocating the interest revenue over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

All revenue is stated net of Goods and Services Tax (“GST”).

(s) Income tax and other taxes Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets, liabilities and their carrying amounts for financial statements purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised.


28

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Tax consolidation legislation Clancy Exploration Limited and its wholly-owned Australian controlled entity formed a tax consolidated group on 1 July 2008. However, they continue to account for their own current and deferred tax amounts. The consolidated entity has applied the stand alone taxpayer approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes. In addition to its own current and deferred tax amounts, Clancy Exploration Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Members of the tax consolidated group have not entered into a tax funding agreement and as no current tax assets or liabilities or deferred tax assets are recognised in relation to tax losses or unused tax credits, no contributions or distributions are required to be made under AASB Int 1052 Tax Consolidation Accounting. Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: · when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in

which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

· receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the taxation authority.

(t) Earnings per share Basic earnings per share is calculated as profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as profit attributable to members of the parent, adjusted for: - costs of servicing equity (other than dividends); - the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been

recognised as expenses; and - other non-discretionary changes in revenues or expenses during the period that would result from the

dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

39

For

per

sona

l use

onl

y


29


(u) Exploration Expenditure

Exploration and evaluation costs are accumulated and accounted for separately on an area of interest basis. An area of interest is represented by an exploration project, which may include multiple tenements within a single geographic region. For each area of interest, the company makes an election regarding its treatment of exploration and evaluation expenditure and whether it will be charged to the income statement as incurred, under the expense category “exploration expenditure,” or capitalised as an exploration and evaluation asset. An exploration and evaluation can only be recognised in relation to an area of interest if the following conditions are satisfied: a) the rights to tenure of the area of interest are current; and b) at least one of the following conditions is also met:

(i) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and

(ii) exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Capitalised exploration and evaluation expenditures are recorded as an exploration asset at cost less impairment charges. All capitalised exploration and evaluation expenditure are monitored for indicators of impairment. Where an impairment indicator is identified, an assessment is performed for each area of interest to which the exploration and evaluation expenditure is attributed. To the extent that capitalised expenditure is not expected to be recovered it is charged to the income statement. At 30 June 2014, the Group elected to capitalise the acquisition costs associated with the acquisition of the North Arunta tenements. These costs were then reimbursed or impaired during the year ended 30 June 2015. Consistent with prior periods, for all other tenements, the Company has elected to expense the exploration and evaluation costs. Exploration expenditure in relation to the joint operations managed by the consolidated entity is funded by the jointly controlled operation partner. The consolidated entity makes a cash call for expenditure at the beginning of each quarter for these joint operations on the basis of forecast expenditure. The consolidated entity recognises exploration expenditure reimbursed in advance at year end in the event that cash has been received in advance of expenditure. Exploration expenditure in respect of these joint operations classified in the statement of comprehensive income within the income or expense category “Net joint venture reimbursed expenses”.

(v) Financial Liabilities and Equity Instruments Issued by the Consolidated Entity (i) Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual agreement.

(ii) Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

(iii) Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ or ‘other financial liabilities’.

40

For

per

sona

l use

onl

y


29


(u) Exploration Expenditure

Exploration and evaluation costs are accumulated and accounted for separately on an area of interest basis. An area of interest is represented by an exploration project, which may include multiple tenements within a single geographic region. For each area of interest, the company makes an election regarding its treatment of exploration and evaluation expenditure and whether it will be charged to the income statement as incurred, under the expense category “exploration expenditure,” or capitalised as an exploration and evaluation asset. An exploration and evaluation can only be recognised in relation to an area of interest if the following conditions are satisfied: a) the rights to tenure of the area of interest are current; and b) at least one of the following conditions is also met:

(i) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and

(ii) exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Capitalised exploration and evaluation expenditures are recorded as an exploration asset at cost less impairment charges. All capitalised exploration and evaluation expenditure are monitored for indicators of impairment. Where an impairment indicator is identified, an assessment is performed for each area of interest to which the exploration and evaluation expenditure is attributed. To the extent that capitalised expenditure is not expected to be recovered it is charged to the income statement. At 30 June 2014, the Group elected to capitalise the acquisition costs associated with the acquisition of the North Arunta tenements. These costs were then reimbursed or impaired during the year ended 30 June 2015. Consistent with prior periods, for all other tenements, the Company has elected to expense the exploration and evaluation costs. Exploration expenditure in relation to the joint operations managed by the consolidated entity is funded by the jointly controlled operation partner. The consolidated entity makes a cash call for expenditure at the beginning of each quarter for these joint operations on the basis of forecast expenditure. The consolidated entity recognises exploration expenditure reimbursed in advance at year end in the event that cash has been received in advance of expenditure. Exploration expenditure in respect of these joint operations classified in the statement of comprehensive income within the income or expense category “Net joint venture reimbursed expenses”.

(v) Financial Liabilities and Equity Instruments Issued by the Consolidated Entity (i) Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual agreement.

(ii) Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

(iii) Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ or ‘other financial liabilities’.


30


(iv) Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financially liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Equally, the consolidated entity continually employs judgement in the application of its accounting policies. Management has not identified any critical accounting policies for which significant judgements, estimates and assumptions are made.

Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 4. OTHER INCOME $ $

Interest revenue 29,108 20,910 Management Fees 208,776 27,425

Profit on sale of motor vehicles (i) 34,615 -

Total Other Income 272,499 48,334

(i) Two vehicles owned by the Company were sold during the year ended 30 June 2015. Details of the sale are provided below:

$ Original cost of motor vehicles 117,280 Accumulated depreciation at date of disposal (91,440) Written down value 25,840 Proceeds on sale 60,455 Profit on sale of motor vehicles 34,615

41

For

per

sona

l use

onl

y


31

5. OTHER EXPENSES

Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 $ $

(a) Employee benefits expense includes:

Directors' fees 132,793 64,513 Salaries 658,162 364,655

Workers’ compensation costs 20,454 8,461 Annual leave provision (34,328) 1,171 Long service leave provision (17,596) 5,964 Post-employment benefits expense 70,252 37,500 Other employee benefits expense 27,514 4,134 857,251 486,398

(b) Net recovery from joint venture partners Joint venture exploration expenditure 2,031,856 370,010 Less: Joint venture funding (i) (2,376,067) (520,118) (344,211) (150,108)

(i) The Company recovers a range of expenses classified elsewhere in the Statement of Comprehensive

Income from its joint venture partners, in addition to exploration expenditure. Such expenses include a portion of salaries and other exploration related overheads including depreciation, occupancy costs and insurance.

(c) Depreciation, amortisation and impairment expense included in statement of comprehensive income

Depreciation of plant & equipment 9,724 13,143 Amortisation of software and leasehold improvements 1,720 1,027 Impairment of plant & equipment - - 11,444 14,170

42

For

per

sona

l use

onl

y


31

5. OTHER EXPENSES

Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 $ $

(a) Employee benefits expense includes:

Directors' fees 132,793 64,513 Salaries 658,162 364,655

Workers’ compensation costs 20,454 8,461 Annual leave provision (34,328) 1,171 Long service leave provision (17,596) 5,964 Post-employment benefits expense 70,252 37,500 Other employee benefits expense 27,514 4,134 857,251 486,398

(b) Net recovery from joint venture partners Joint venture exploration expenditure 2,031,856 370,010 Less: Joint venture funding (i) (2,376,067) (520,118) (344,211) (150,108)

(i) The Company recovers a range of expenses classified elsewhere in the Statement of Comprehensive

Income from its joint venture partners, in addition to exploration expenditure. Such expenses include a portion of salaries and other exploration related overheads including depreciation, occupancy costs and insurance.

(c) Depreciation, amortisation and impairment expense included in statement of comprehensive income

Depreciation of plant & equipment 9,724 13,143 Amortisation of software and leasehold improvements 1,720 1,027 Impairment of plant & equipment - - 11,444 14,170


32

6. INCOME TAX Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 $ $ (a) Income tax expense The major components of income tax expense are:

Statement of comprehensive income

Current income tax Current income tax charge/(benefit) - - Adjustments in respect of current income tax of previous years -

- Deferred income tax - Relating to origination and reversal of temporary differences - - Income tax expense/(benefit) reported in statement of comprehensive

income - - (b) Amounts charged or credited directly to equity Deferred income tax related to items charged or credited directly to equity - -

Unrealised loss on available-for-sale financial assets - - Income tax benefit reported in equity - - (c) Numerical reconciliation of accounting profit to tax expense

A reconciliation between tax expense and the accounting profit before income tax multiplied by the consolidated entity's applicable income tax rate is as follows:

Accounting loss before income tax (955,446) (723,235) At the consolidated entity's statutory income tax rate of 30% (2014: 30%) (286,634) (216,970) Non-deductible entertainment/penalties - - Other non-allowable items - - Share based payments - 753 Fringe benefits tax 328 321 Increase in unrecognised deferred tax assets 286,306 215,896 Disposal of tenements - - Income tax benefit - - (d) Current tax assets and liabilities Current tax liability - -

(e) Recognised deferred tax assets and liabilities The Group has not recognised any deferred tax assets or liabilities during the year (2014: Nil) (f) Tax losses

The group has Australian revenue tax losses for which no deferred tax asset is recognised on the statement of financial position of $13,504,018 (2014: $12,658,409) which are available indefinitely for offset against future taxable income subject to continuing to meet the relevant statutory tests.

The group has Australian capital tax losses for which no deferred tax asset is recognised on the statement of financial position of $60,113 (2014: $111,962) which are available indefinitely for offset against future taxable capital gains subject to continuing to meet the relevant statutory tests.

43

For

per

sona

l use

onl

y


33

6. INCOME TAX (continued) (g) Unrecognised temporary differences

As at 30 June 2015, the group has other temporary differences (excluding tax differences relating to tax losses) for which no deferred tax asset is recognised in the statement of financial position of $264,008 (2014: $317,810). None of these unrecognised temporary differences relate to investments in subsidiaries, associates or joint ventures.

(h) Tax consolidation

Members of the tax consolidated group and the tax sharing agreement

Clancy Exploration Limited and its 100% owned Australian resident subsidiary were both subsidiaries in a tax-consolidated group with Geoinformatics Exploration Australia Pty Ltd as the head entity until 2 July 2007. A new tax-consolidated group was formed on 1 July 2008 with Clancy Exploration Limited as Head Entity. Members of the new tax-consolidated group have not yet entered into a tax sharing agreement.

7. EARNINGS PER SHARE

The following reflects the income used in the basic and diluted earnings per share computations.

(a) Earnings used in calculating earnings per share Consolidated

12 months

ended 30 June 2015

6 months ended

30 June 2014 $ $ For basic and diluted earnings per share: Loss from continuing operations after tax for the year (955,446) (723,234) (b) Weighted average number of shares 2015 2014

No. of shares No. of shares Weighted average number of ordinary shares for basic and diluted earnings per share 209,679,050 206,254,392

(c) Earnings per share 12 months ended

30 June 2015

6 months ended

30 June 2014

Basic loss per share (0.5 cents) (0.4 cents)

44

For

per

sona

l use

onl

y


33

6. INCOME TAX (continued) (g) Unrecognised temporary differences

As at 30 June 2015, the group has other temporary differences (excluding tax differences relating to tax losses) for which no deferred tax asset is recognised in the statement of financial position of $264,008 (2014: $317,810). None of these unrecognised temporary differences relate to investments in subsidiaries, associates or joint ventures.

(h) Tax consolidation

Members of the tax consolidated group and the tax sharing agreement

Clancy Exploration Limited and its 100% owned Australian resident subsidiary were both subsidiaries in a tax-consolidated group with Geoinformatics Exploration Australia Pty Ltd as the head entity until 2 July 2007. A new tax-consolidated group was formed on 1 July 2008 with Clancy Exploration Limited as Head Entity. Members of the new tax-consolidated group have not yet entered into a tax sharing agreement.

7. EARNINGS PER SHARE

The following reflects the income used in the basic and diluted earnings per share computations.

(a) Earnings used in calculating earnings per share Consolidated

12 months

ended 30 June 2015

6 months ended

30 June 2014 $ $ For basic and diluted earnings per share: Loss from continuing operations after tax for the year (955,446) (723,234) (b) Weighted average number of shares 2015 2014

No. of shares No. of shares Weighted average number of ordinary shares for basic and diluted earnings per share 209,679,050 206,254,392

(c) Earnings per share 12 months ended

30 June 2015

6 months ended

30 June 2014

Basic loss per share (0.5 cents) (0.4 cents)


34

8.

CASH AND CASH EQUIVALENTS

Consolidated

2015 2014 Notes $ $ Cash at bank 1,231,434 1,045,092 Short term bank deposits - 250,000 1,231,434 1,295,092

Under the terms of certain joint venture agreements, the Company has an obligation to spend $174,645 (30 June 2014: $314,582) of the cash balance on the respective joint venture projects, or in the event the joint venture partner does not elect to contribute beyond its minimum contribution, certain of this amount may be refunded The Company received $750,000 from HPX on 4 June 2015 under the terms of a joint venture agreement, $525,000 of which was sequestered to be spent on the Trundle project. At 30 June 2015, expenditure of $69,062 had been incurred on the Trundle project, with the remaining $455,938 held as cash to be spent over the remaining months of 2015. In addition, as at 30 June 2015 the Company has $210,000 in restricted cash (2014: $300,000) which is included as a Restricted Cash Asset in the Statement of Financial Position, held at Westpac Banking Corporation which has been provided as set-off security in respect of a $160,000 bank guarantee facility provided in turn for exploration licence security purposes and a $50,000 corporate credit card facility.

Financing facilities available

Other than the aforementioned bank guarantee facility, at balance date, the Company did not have any financing facilities available.

9.

TRADE AND OTHER RECEIVABLES (CURRENT)

Consolidated

2015 2014 $ $ Trade and sundry debtors 49,486 30 Accrued income 2,429 2,910 GST input tax refundable 18,536 30,265 Prepayments 30,755 55,760 101,206 88,965

(a) Fair value and credit risk

Due to the short term nature of the receivables, their carrying value is assumed to approximate their fair value. GST input tax refundable is receivable from the Commonwealth of Australia and is therefore viewed as having low credit risk. Accrued income is receivable from Westpac Banking Corporation (and National Australia Bank in prior year) and is therefore viewed as having low credit risk.

10. REIMBURSABLE EXPLORATION EXPENDITURE

Consolidated Notes 2015 2014 $ $ Reimbursable exploration expenditure (i) 19,821 - 19,821 -

(i) As at 30 June 2015, the Company had incurred exploration expenditure under its joint venture agreement

with Ramelius Resources Limited (“Ramelius”), which will be reimbursed to the Company via a cash call to be made in the month following expenditure.

45

For

per

sona

l use

onl

y


35

11. PLANT AND EQUIPMENT Consolidated

12 months 2015

6 months 2014

$ $ Original Cost Computer Equipment At 1 July (2014: at 1 January) 45,391 45,391 Additions 16,628 - Disposals - - At 30 June 62,019 45,391 Plant and Equipment At 1 July (2014: at 1 January) 92,591 90,491 Additions - 2,100 Disposals - - At 30 June 92,591 92,591

Motor Vehicles At 1 July (2014: at 1 January) 163,017 163,017 Additions - - Disposals (117,280) - At 30 June 45,737 163,017 Office Furniture

At 1 July (2014: at 1 January) 23,693 23,693 Additions - - Disposals - - At 30 June 23,693 23,693

Leasehold Improvements

At 1 July (2014: at 1 January) 19,791 19,791 Additions - - Disposals - - At 30 June 19,791 19,791 Library At 1 July (2014: at 1 January) 1,515 1,515 Additions - - Disposals - - At 30 June 1,515 1,515 Total Plant and Equipment At 1 July (2014: at 1 January) 345,997 343,897 Additions 16,628 2,100 Disposals (117,280) - At 30 June 245,345 345,997

46

For

per

sona

l use

onl

y


35

11. PLANT AND EQUIPMENT Consolidated

12 months 2015

6 months 2014

$ $ Original Cost Computer Equipment At 1 July (2014: at 1 January) 45,391 45,391 Additions 16,628 - Disposals - - At 30 June 62,019 45,391 Plant and Equipment At 1 July (2014: at 1 January) 92,591 90,491 Additions - 2,100 Disposals - - At 30 June 92,591 92,591

Motor Vehicles At 1 July (2014: at 1 January) 163,017 163,017 Additions - - Disposals (117,280) - At 30 June 45,737 163,017 Office Furniture

At 1 July (2014: at 1 January) 23,693 23,693 Additions - - Disposals - - At 30 June 23,693 23,693


At 1 July (2014: at 1 January) 19,791 19,791 Additions - - Disposals - - At 30 June 19,791 19,791 Library At 1 July (2014: at 1 January) 1,515 1,515 Additions - - Disposals - - At 30 June 1,515 1,515 Total Plant and Equipment At 1 July (2014: at 1 January) 345,997 343,897 Additions 16,628 2,100 Disposals (117,280) - At 30 June 245,345 345,997


36

11. PLANT AND EQUIPMENT (continued) Consolidated 12 months

2015 6 months

2014 Accumulated Depreciation Computer Equipment At 1 July (2014: at 1 January) 41,720 40,824 Depreciation charge for period 1,552 896 At 30 June 43,272 41,720 Plant and Equipment At 1 July (2014: at 1 January) 80,285 77,856 Depreciation charge for period 4,078 2,429 At 30 June 84,363 80,285

Motor Vehicles At 1 July (2014: at 1 January) 133,844 126,672 Depreciation charge for period 745 7,172 Accumulated depreciation on disposals (91,440) - At 30 June 43,149 133,844 Office Furniture

At 1 July (2014: at 1 January) 16,936 15,960 Depreciation charge for period 1,635 976 At 30 June 18,571 16,936


At 1 July (2014: at 1 January) 18,121 16,478 Depreciation charge for period 1,670 1,643 At 30 June 19,791 18,121 Library At 1 July (2014: at 1 January) 1,397 1,370 Depreciation charge for period 44 27 At 30 June 1,441 1,397 Total Plant and Equipment At 1 July (2014: at 1 January) 292,303 279,160 Depreciation charge for period 9,724 13,143 Disposals (91,440) - At 30 June 210,587 292,303

Total Plant & Equipment Cost 245,345 345,997 Accumulated depreciation (210,587) (292,303) Net carrying amount 34,758 53,694

(i) The useful life of the assets was estimated as follows: Sundry equipment: 5 to 15 years Computer equipment: 4 years Motor vehicles: 5 to 8 years Furniture and Fittings: 5 to 15 years Library: 7 years Leasehold improvements: Over the remainder of the lease term up to 2 years

(ii) No assets have been pledged as security for borrowings.

47

For

per

sona

l use

onl

y


37

12. INTANGIBLE ASSETS Consolidated 2015 2014 $ $ Computer Software

Original Cost At 1 July (2014: at 1 January) 51,057 51,057 Additions - - At 30 June 51,057 51,057 Accumulated Depreciation At 1 July (2014: at 1 January) 48,342 47,315 Amortisation charge for the period 1,720 1,027 Impairment - - At 30 June 50,062 48,342 At 30 June Gross book value 51,057 51,057 Accumulated amortisation and impairment (50,062) (48,342) Net carrying amount 995 2,715

(i) The useful life of intangible assets was estimated as follows:

Computer software: 2.5 years

13. EXPLORATION ASSET On 29 November 2013, the Company announced that it had entered into an agreement with ABM Resources NL (ASX: ABU) whereby the Company had the option to acquire 100% of ABM’s interests in the North Arunta Project Region in the Northern Territory. Clancy paid an option fee of $250,000 for the exclusive option to complete due diligence on the projects and subject to various conditions including satisfactory due diligence by both parties and various approvals, the right to acquire the projects. On 3 February 2014, Clancy announced that it had completed the due diligence processes and had exercised its option to acquire 100% of ABM’s interests in the North Arunta Project Region in the Northern Territory. The Company paid an option exercise fee of $150,000. Clancy shareholder approval for the transaction was granted at the AGM on 7 May 2014. The key remaining condition required Clancy to complete a capital raising of not less than $2.5 million by 2 August 2014. Subsequent to the end of the year, Clancy determined that the transaction would not proceed due to the inability to raise the required funding, given the challenging state of the equity markets. Consistent with the agreement with ABM, the option exercise fee of $150,000 was refunded to Clancy on 15 August 2014. However the option fee of $250,000 was not refundable, and was expensed in the profit and loss statement during the month of August 2014.

14. TRADE AND OTHER PAYABLES (Current) Notes Consolidated 2015 2014 $ $

Trade payables (i) – (ii) 80,724 152,097 Accrued expenses 32,651 38,067 GST Payable 1,403 38,066

114,778 228,230

Terms and conditions:

(i) Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

(ii) Trade payables are non-interest bearing and are normally settled on 30 day terms.

48

For

per

sona

l use

onl

y


37

12. INTANGIBLE ASSETS Consolidated 2015 2014 $ $ Computer Software

Original Cost At 1 July (2014: at 1 January) 51,057 51,057 Additions - - At 30 June 51,057 51,057 Accumulated Depreciation At 1 July (2014: at 1 January) 48,342 47,315 Amortisation charge for the period 1,720 1,027 Impairment - - At 30 June 50,062 48,342 At 30 June Gross book value 51,057 51,057 Accumulated amortisation and impairment (50,062) (48,342) Net carrying amount 995 2,715

(i) The useful life of intangible assets was estimated as follows:

Computer software: 2.5 years

13. EXPLORATION ASSET On 29 November 2013, the Company announced that it had entered into an agreement with ABM Resources NL (ASX: ABU) whereby the Company had the option to acquire 100% of ABM’s interests in the North Arunta Project Region in the Northern Territory. Clancy paid an option fee of $250,000 for the exclusive option to complete due diligence on the projects and subject to various conditions including satisfactory due diligence by both parties and various approvals, the right to acquire the projects. On 3 February 2014, Clancy announced that it had completed the due diligence processes and had exercised its option to acquire 100% of ABM’s interests in the North Arunta Project Region in the Northern Territory. The Company paid an option exercise fee of $150,000. Clancy shareholder approval for the transaction was granted at the AGM on 7 May 2014. The key remaining condition required Clancy to complete a capital raising of not less than $2.5 million by 2 August 2014. Subsequent to the end of the year, Clancy determined that the transaction would not proceed due to the inability to raise the required funding, given the challenging state of the equity markets. Consistent with the agreement with ABM, the option exercise fee of $150,000 was refunded to Clancy on 15 August 2014. However the option fee of $250,000 was not refundable, and was expensed in the profit and loss statement during the month of August 2014.

14. TRADE AND OTHER PAYABLES (Current) Notes Consolidated 2015 2014 $ $

Trade payables (i) – (ii) 80,724 152,097 Accrued expenses 32,651 38,067 GST Payable 1,403 38,066

114,778 228,230

Terms and conditions:

(i) Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

(ii) Trade payables are non-interest bearing and are normally settled on 30 day terms.


38

15. PROVISIONS Consolidated

2015 2014

$ $ CURRENT Employee entitlements Accumulated annual leave 28,910 57,429 Accumulated long service leave 30,211 45,792 Balance as at end of period 59,121 103,221

NON CURRENT Employee entitlements Accumulated annual leave - 7,652 Accumulated long service leave 18,350 20,365 Balance as at end of period 18,350 28,017

During the year, a substantial amount of annual leave and long service leave was taken by various employees of the Company, thereby reducing the balance of the respective provisions.

16. UNEARNED REVENUE AND EXPLORATION EXPENDITURE FUNDED

IN ADVANCE

Consolidated

2015 2014 $ $ Unearned revenue (i) 3,171 32,821 Exploration expenditure funded (ii) 32,241 314,582 Government grant (iii) 142,404 - 177,816 347,403

(i) As at 30 June 2015, the Company had unearned revenue in respect of its management fees derived

from its joint ventures with Kaizen Discovery Inc. (“Kaizen”). (ii) As at 30 June 2015, the Company had made a cash call for expenditure which under its joint venture

agreements with Kaizen will either be spent on exploration in respect of the joint venture or in the event that Kaizen does not elect to contribute beyond its minimum contribution (see note 20), will be refunded to the joint venture partner.

(iii) During the year, the Company received a grant from the NSW Department of Trade and Investment as part of the New Frontiers Cooperative Drilling project. This was a reimbursement for exploration drilling expenses incurred in respect of the Fairholme project, which currently forms part of the joint venture agreement with Kaizen. It is expected that the remaining grant funds will be expended on exploration activity at Fairholme during the 2015/16 financial year.

49

For

per

sona

l use

onl

y


39

17. ISSUED CAPITAL Consolidated 2015 2014 $ $ Ordinary shares (a) 15,207,200 14,457,200

(a) Ordinary shares Issued and fully paid ordinary shares carry one vote per share and carry the right to dividends.

Consolidated

2015 2014

Number of

shares $ Number of shares $

Movement in ordinary shares on issue Beginning of financial year 206,254,392 14,457,200 206,254,392 14,457,200 Add: Shares issued pursuant to placement (i) 50,000,000 750,000 - -

Less: Transaction costs on share issues - - - - As at 30 June 256,254,392 15,207,200 206,254,392 14,457,200

(i) On 5 May 2015, the Company entered into a farm-in and joint venture agreement with High Power Exploration Inc. (“HPX”) on the Trundle copper-gold project in NSW. Under the terms of this agreement, HPX subscribed for 50,000,000 Clancy shares at 1.5 cents ($0.015) each to raise $750,000. The share placement was completed on 5 June 2015.

(b) Capital Risk Management

When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain appropriate returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures an appropriate cost of capital available for the entity.

In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets. The entity does not have a defined share buy-back plan. No dividends were paid in the year ended 30 June 2015 and no dividends are expected to be paid in the 2015/16 financial year.

The consolidated entity is not subject to any externally imposed capital requirements.

Management reviews management accounts on a monthly basis and actual expenditures against budget on a monthly basis.

50

For

per

sona

l use

onl

y


39

17. ISSUED CAPITAL Consolidated 2015 2014 $ $ Ordinary shares (a) 15,207,200 14,457,200

(a) Ordinary shares Issued and fully paid ordinary shares carry one vote per share and carry the right to dividends.

Consolidated

2015 2014

Number of

shares $ Number of shares $

Movement in ordinary shares on issue Beginning of financial year 206,254,392 14,457,200 206,254,392 14,457,200 Add: Shares issued pursuant to placement (i) 50,000,000 750,000 - -

Less: Transaction costs on share issues - - - - As at 30 June 256,254,392 15,207,200 206,254,392 14,457,200

(i) On 5 May 2015, the Company entered into a farm-in and joint venture agreement with High Power Exploration Inc. (“HPX”) on the Trundle copper-gold project in NSW. Under the terms of this agreement, HPX subscribed for 50,000,000 Clancy shares at 1.5 cents ($0.015) each to raise $750,000. The share placement was completed on 5 June 2015.

(b) Capital Risk Management

When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain appropriate returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures an appropriate cost of capital available for the entity.

In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets. The entity does not have a defined share buy-back plan. No dividends were paid in the year ended 30 June 2015 and no dividends are expected to be paid in the 2015/16 financial year.

The consolidated entity is not subject to any externally imposed capital requirements.

Management reviews management accounts on a monthly basis and actual expenditures against budget on a monthly basis.


40

18. RESERVES Consolidated 2015 2014 $ $

Share-based payment reserve 1,665,605 1,665,605 1,665,605 1,665,605 (a) Movement in reserves

Share-based reserve

Balance at beginning of the financial year 1,665,605 1,660,974 Arising on share-based payments - 4,631 Balance at end of financial year 1,665,605 1,665,605

(b) Nature and purpose of reserves

The share-based payments reserve records the value of share options issued to the Company's directors, employees, consultants and brokers as well as the vendors of drilling services and tenements. It also includes an apportionment for the value of free attaching options from proceeds of a rights issue.

19. STATEMENT OF CASH FLOWS RECONCILIATION Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 $ $ (a) Reconciliation of the net profit/(loss) after tax to net cash

flows from operations

Loss from ordinary activities after income tax (955,446) (723,234)

Adjustments for: Depreciation 9,724 13,143 Amortisation of intangible assets 1,720 1,027 Impairment of exploration assets 250,000 - Profit on disposal of property, plant and equipment (34,615) - Non-cash expenses paid on behalf of controlled entity via loan account

243 236

Equity settled share based payments 195 726

Changes in assets and liabilities (Increase)/decrease in trade and other receivables (35,263) 145,849 Decrease /(increase) in prepayments 46,614 (6,380) (Decrease)/increase in trade and other payables (113,454) (42,975) (Decrease)/increase in provisions (266,960) 203,636 Net cash flow used in operating activities (1,097,242) (407,972)

(b) Bank guarantee facility Bank guarantee facility 210,000 300,000 Amount utilised (160,000) (180,000) 50,000 120,000

The bank guarantee facility has been provided by a financial institution for exploration licence security and corporate credit card purposes. Term deposits of $210,000 (2014: $300,000) have been provided as set-off security for these facilities.

51

For

per

sona

l use

onl

y


41

20. INTEREST IN JOINTLY CONTROLLED OPERATIONS

As at 30 June 2015, the Group had the following significant interests in joint ventures:

(a) Bass Metals Limited unincorporated joint venture

(i) Bass Metals Limited ("Bass") and Clancy Exploration Limited have a 75% and 25% interest respectively in two Tasmanian exploration licences ("tenements"), the Lake Margaret licence and the Sock Creek licence in the Mt Read Volcanic Belt in Western Tasmania.

(ii) Joint venture property initially consists of these tenements and all mining information in the possession or control of either party relating to these tenements. It is owned by the parties as tenants in common in proportion to their respective interests. Exploration costs are currently incurred by Bass and there are no joint venture assets or liabilities.

(iii) Bass as the party holding the majority interest is the manager of the joint venture and all joint venture activities.

(iv) Bass has agreed to sole fund the joint venture until the completion of a pre-feasibility study on any one of the tenements. Thereafter expenditure is in proportion to joint venture interests. At the time of any of any withdrawal by Bass the tenements must be in good standing and expenditure commitments met. As at the date of this report, Bass had not withdrawn from the joint venture.

(v) The Company has no capital commitments or contingent liabilities in respect of this joint venture. (vi) Under the provisions of the joint venture agreement, the Company may become entitled to performance

shares.

(b) Minemakers TTT Pty Ltd unincorporated joint venture

(i) Minemakers TTT Pty Ltd ("MTTT") and Clancy Exploration Limited have a 75% and 25% interest respectively in one Tasmanian exploration licences ("tenement"), Oonah, in the Mt Read Volcanic Belt in Western Tasmania.

(ii) MTTT is manager of the joint venture and has funded a work program on each tenement. (iii) The Company may elect to continue to fund its 25% share of future expenditure on this tenement. (iv) There are no joint venture assets or liabilities. (v) The Company has no other capital commitments or contingent liabilities in respect of this joint

venture.

(c) Mitsubishi Metals Corporation unincorporated joint venture

(i) In 2012, the Company entered into a joint venture with Mitsubishi Metals Corporation of Japan (“MMC”) whereby MMC could earn 49% of the Cundumbul, Currumburrama and Genaren projects by funding $3 million expenditure over three years with a minimum commitment of $500,000 in the first year.

(ii) The Company managed the project on behalf of the joint venture. (iii) As at 30 June 2015, the Company was entitled to a 100% interest in each of the projects (2014:

100%). (iv) The Company received a notice from MMC on 3 August 2015 confirming that MMC had withdrawn

from the joint venture.

52

For

per

sona

l use

onl

y


41

20. INTEREST IN JOINTLY CONTROLLED OPERATIONS

As at 30 June 2015, the Group had the following significant interests in joint ventures:

(a) Bass Metals Limited unincorporated joint venture

(i) Bass Metals Limited ("Bass") and Clancy Exploration Limited have a 75% and 25% interest respectively in two Tasmanian exploration licences ("tenements"), the Lake Margaret licence and the Sock Creek licence in the Mt Read Volcanic Belt in Western Tasmania.

(ii) Joint venture property initially consists of these tenements and all mining information in the possession or control of either party relating to these tenements. It is owned by the parties as tenants in common in proportion to their respective interests. Exploration costs are currently incurred by Bass and there are no joint venture assets or liabilities.

(iii) Bass as the party holding the majority interest is the manager of the joint venture and all joint venture activities.

(iv) Bass has agreed to sole fund the joint venture until the completion of a pre-feasibility study on any one of the tenements. Thereafter expenditure is in proportion to joint venture interests. At the time of any of any withdrawal by Bass the tenements must be in good standing and expenditure commitments met. As at the date of this report, Bass had not withdrawn from the joint venture.

(v) The Company has no capital commitments or contingent liabilities in respect of this joint venture. (vi) Under the provisions of the joint venture agreement, the Company may become entitled to performance

shares.

(b) Minemakers TTT Pty Ltd unincorporated joint venture

(i) Minemakers TTT Pty Ltd ("MTTT") and Clancy Exploration Limited have a 75% and 25% interest respectively in one Tasmanian exploration licences ("tenement"), Oonah, in the Mt Read Volcanic Belt in Western Tasmania.

(ii) MTTT is manager of the joint venture and has funded a work program on each tenement. (iii) The Company may elect to continue to fund its 25% share of future expenditure on this tenement. (iv) There are no joint venture assets or liabilities. (v) The Company has no other capital commitments or contingent liabilities in respect of this joint

venture.

(c) Mitsubishi Metals Corporation unincorporated joint venture

(i) In 2012, the Company entered into a joint venture with Mitsubishi Metals Corporation of Japan (“MMC”) whereby MMC could earn 49% of the Cundumbul, Currumburrama and Genaren projects by funding $3 million expenditure over three years with a minimum commitment of $500,000 in the first year.

(ii) The Company managed the project on behalf of the joint venture. (iii) As at 30 June 2015, the Company was entitled to a 100% interest in each of the projects (2014:

100%). (iv) The Company received a notice from MMC on 3 August 2015 confirming that MMC had withdrawn

from the joint venture.


42

20. INTEREST IN JOINTLY CONTROLLED OPERATIONS (Continued)

(d) Kaizen Discovery Inc. unincorporated joint venture

(i) On 20 May 2013, the Company entered into a new joint venture with the signing of a Farm In and

Joint Venture Agreement with High Power Exploration Inc (“HPX”) on the Fairholme copper gold project in New South Wales.

(i) Under the terms of the Agreement HPX has the right to earn an initial 49% of the Fairholme project by funding A$1 million in exploration over one year with a minimum spending commitment of A$500,000. HPX then will have the right to fund a further A$4 million in exploration over the subsequent two years with the aim of delineating a scoping study to take HPX’s stake to 65 %. HPX can increase its stake to 80% in phases or 85% by funding a Prefeasibility Study (depending on the cost of the study). In December 2013, HPX transferred its interest in the joint venture to Kaizen Discovery Inc.

(ii) The Company is managing the project on behalf of the joint venture. (iii) As at 30 June 2015, the Company was entitled to a 51% interest in the projects.

(e) Ramelius unincorporated joint venture

(i) In April 2015 the Company entered into a farm-in agreement with Ramelius Resources Limited (“Ramelius”) on the Condobolin project.

(ii) Under the terms of the agreement, Ramelius has the right to earn 80% of the Condobolin project by funding A$2 million for exploration over four years. If Ramelius withdraws before earning 80%, the project ownership reverts 100% to Clancy.

(iii) After the farm-in phase is completed, Clancy will be carried to a decision to mine, at which point Clancy will have the right to contribute its 20% share of costs post decision to mine, or dilute according to standard industry provisions.

(iv) If Clancy’s interest dilutes to 5%, it will convert to a 2% Net Smelter Royalty. Ramelius will be project manager, however Clancy will be the project operator during the farm-in phase and will be entitled to a 10% management fee on services provided.

(f) HPX unincorporated joint venture

(i) In May 2015 the Company entered into a farm-in agreement with High Power Exploration Inc (“HPX”) on the Trundle copper-gold project in NSW.

(ii) Under the terms of the agreement, HPX will fund A$1 million on exploration over 12 months to earn an initial 51% of the Trundle project with a minimum spend of A$750,000 (Phase 1).

(iii) HPX may then sole fund an additional A$4 million over 3 years (Phase 2) to earn an additional 29% of the Trundle project, for a total of 80%. Failure to meet the Phase 2 commitment will result in 100% of the Trundle project reverting to Clancy.

(iv) After the completion of Phase 2, Clancy will have the right to contribute its 20% share of costs, or dilute according to standard industry provisions. If Clancy’s interest dilutes to 5%, its interest in the project will convert to a 2% Net Smelter Royalty.

(v) The Company received $750,000 from HPX on 4 June 2015 under the terms of the agreement. $525,000 of which was sequestered to be spent on the Trundle project. At 30 June 2015, expenditure of $69,062 had been incurred on the Trundle project, with the remaining $455,938 to be spent over the remaining months of 2015.

53

For

per

sona

l use

onl

y


43

21. SEGMENT INFORMATION The consolidated entity operates predominantly in one reportable business segment, managed by one segment manager and in one geographical location. The operations of the consolidated entity consist of gold, copper and base metals exploration, within Australia. The information disclosed in the financial statements is the same information utilised in internal reporting by the chief operating decision maker. Accordingly no additional quantitative or qualitative disclosures are required.

22. COMMITMENTS Consolidated

2015 $

2014 $

Estimated commitments for which no provisions were included in the financial statements are as follows:

(a) Exploration Expenditure Commitments:

(i) Under 12 (2014: 12) NSW Government and 3 (2014:2) Tasmanian Government exploration licenses

Payable - not later than one year 281,107 260,789 - later than one year and not later than five years 237,603 400,285

518,710 661,074 The expenditure commitments as at 30 June 2015 include $169,216 (2014: $244,663) commitments that will be met by one of the Company’s joint venture partners (Kaizen, MMC, Ramelius or HPX) as a result of the minimum expenditure commitment under the joint venture agreements with those parties.

Of the 15 exploration licences held by the Company, 2 are pending renewal.

Included in overall commitments calculations are estimates of the Company’s expected commitments in respect of its sole-funded exploration licences. All the exploration expenditure commitments are non-binding, in respect of outstanding expenditure commitments, in that the Company or its joint venture partners have the option to relinquish and lose these licences or their contractual commitments at any stage, at the cost of its cumulative expenditures up to the point of relinquishment. Refer to Note 20 for details of Jointly Controlled Operations.

54

For

per

sona

l use

onl

y


43

21. SEGMENT INFORMATION The consolidated entity operates predominantly in one reportable business segment, managed by one segment manager and in one geographical location. The operations of the consolidated entity consist of gold, copper and base metals exploration, within Australia. The information disclosed in the financial statements is the same information utilised in internal reporting by the chief operating decision maker. Accordingly no additional quantitative or qualitative disclosures are required.

22. COMMITMENTS Consolidated

2015 $

2014 $

Estimated commitments for which no provisions were included in the financial statements are as follows:

(a) Exploration Expenditure Commitments:

(i) Under 12 (2014: 12) NSW Government and 3 (2014:2) Tasmanian Government exploration licenses

Payable - not later than one year 281,107 260,789 - later than one year and not later than five years 237,603 400,285

518,710 661,074 The expenditure commitments as at 30 June 2015 include $169,216 (2014: $244,663) commitments that will be met by one of the Company’s joint venture partners (Kaizen, MMC, Ramelius or HPX) as a result of the minimum expenditure commitment under the joint venture agreements with those parties.

Of the 15 exploration licences held by the Company, 2 are pending renewal.

Included in overall commitments calculations are estimates of the Company’s expected commitments in respect of its sole-funded exploration licences. All the exploration expenditure commitments are non-binding, in respect of outstanding expenditure commitments, in that the Company or its joint venture partners have the option to relinquish and lose these licences or their contractual commitments at any stage, at the cost of its cumulative expenditures up to the point of relinquishment. Refer to Note 20 for details of Jointly Controlled Operations.


44

22. COMMITMENTS (Continued)

(b) Operating Lease Commitments

In October 2014 the consolidated entity extended the lease for office and core shed premises in Orange, NSW for 24 months. On 31 May 2014 it entered into a 60 month operating lease for a photocopier-printer. Its operating lease commitments are as follows:

Consolidated 2015

$ 2014

$ Payable - not later than one year 84,072 12,046 - later than one year and not later than five years 27,750 23,837 111,822 35,883

23. CONTINGENT LIABILITIES

In accordance with normal industry practice the consolidated entity has entered into joint venture operations and farm-in agreements with other parties for the purpose of exploring and developing its mineral interests. If a party to a joint venture defaults and does not contribute its share of joint venture obligations, then the other joint venture partners are liable to meet those obligations. In this event the interest in the tenements held by the defaulting party may be redistributed to the remaining joint venture partners. A contingent liability exists in respect of contributions due to be paid by farm-in partners of the economic entity to some of its joint ventures. However, no material losses are anticipated in respect of any of these contingencies as expenditure commitments, if not recovered from joint venture partners, can be terminated through exploration licence relinquishment at any stage.

55

For

per

sona

l use

onl

y


45

24. RELATED PARTY DISCLOSURES

(a) Ultimate parent The ultimate Australian parent entity and the ultimate parent of the consolidated entity is Clancy Exploration Limited.

(b) Subsidiaries The subsidiary of Clancy Exploration Limited is listed in the following table:

Nature of investment

Country of incorporation

% Equity interest Investment $

Name

2015 2014 2015 2014

Geoinformatics Exploration Tasmania Pty Ltd Ordinary shares Australia

100 100 1 1

1 1

(c) Transactions with related parties The following table provides the total amount of transactions (GST exclusive where GST applies) entered into with related parties for the relevant financial year. The transactions have all been undertaken on an arms’ length basis.

Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 $ $

Purchase of goods and services Director's fees billed by C2Skye Management Ltd, a company controlled by a former director J. Macdonald 11,032 18,006 Directors travel expenses billed by C2Skye Management Ltd 2,437 4,394 Directors travel expenses billed by Tectonex Geoconsultants Pty Ltd, a company controlled by the chairman M. Etheridge 6,873 5,450 Accounting and financial consultancy services paid to Forsyth & Associates Pty Ltd, a company associated with a former director and chief financial officer, N. Forsyth-Stock 32,113 48,388 Directors travel and other expenses paid to Forsyth & Associates Pty Ltd 290 697 Director’s fees billed by Konkera Corporate, a company controlled by a director, Evan Cranston 24,000 - Director’s fees billed by Plage Mala Limited, a company controlled by a director, Nathan Featherby 32,449 24,000 All related party purchases have been settled during the year and there are no related party transactions included in the trade creditors balance at 30 June 2015.

56

For

per

sona

l use

onl

y


45

24. RELATED PARTY DISCLOSURES

(a) Ultimate parent The ultimate Australian parent entity and the ultimate parent of the consolidated entity is Clancy Exploration Limited.

(b) Subsidiaries The subsidiary of Clancy Exploration Limited is listed in the following table:

Nature of investment

Country of incorporation

% Equity interest Investment $

Name

2015 2014 2015 2014

Geoinformatics Exploration Tasmania Pty Ltd Ordinary shares Australia

100 100 1 1

1 1

(c) Transactions with related parties The following table provides the total amount of transactions (GST exclusive where GST applies) entered into with related parties for the relevant financial year. The transactions have all been undertaken on an arms’ length basis.

Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 $ $

Purchase of goods and services Director's fees billed by C2Skye Management Ltd, a company controlled by a former director J. Macdonald 11,032 18,006 Directors travel expenses billed by C2Skye Management Ltd 2,437 4,394 Directors travel expenses billed by Tectonex Geoconsultants Pty Ltd, a company controlled by the chairman M. Etheridge 6,873 5,450 Accounting and financial consultancy services paid to Forsyth & Associates Pty Ltd, a company associated with a former director and chief financial officer, N. Forsyth-Stock 32,113 48,388 Directors travel and other expenses paid to Forsyth & Associates Pty Ltd 290 697 Director’s fees billed by Konkera Corporate, a company controlled by a director, Evan Cranston 24,000 - Director’s fees billed by Plage Mala Limited, a company controlled by a director, Nathan Featherby 32,449 24,000 All related party purchases have been settled during the year and there are no related party transactions included in the trade creditors balance at 30 June 2015.


46

24. RELATED PARTY DISCLOSURES (Continued)

Consolidated

12 months ended

30 June 2015

6 months ended

30 June 2014 $ $

Superannuation guarantee contributions paid

Amounts paid to Tectonex Geoconsultants Pty Ltd as trustee for Etheridge Superannuation Fund, a trustee company controlled by the chairman M. Etheridge who is also a beneficiary of the superannuation fund 5,700 2,275 Amounts paid to Far Range Pty Ltd as trustee for Far Range Superannuation Fund a trustee company controlled by a director G. Barnes who is also a beneficiary of the superannuation fund 21,732 11,013 Amounts paid to Matrix Superannuation Master Trust, a superannuation fund in which director and chief financial officer, N. Forsyth-Stock is a beneficiary 1,307 1,527

25. SUBSEQUENT EVENTS

Subsequent to 30 June 2015, the Company received notice from Mitsubishi Materials Corporation (MMC) that it would not continue with formal joint ventures on the Cundumbul and Genaren projects, having met its A$3 million earn-in expenditure commitment over three years. Both of these projects have now reverted to 100% Clancy ownership. There is no material financial effect of this joint venture cessation, as the minimum expenditure commitments for the current lease periods on the relevant tenements have been met through exploration on the projects prior to balance date. In any event, the commitments can be terminated through exploration licence relinquishment at any stage.

57

For

per

sona

l use

onl

y


47

26. DIRECTORS AND KEY MANAGEMENT PERSONNEL

(a) Details of Key Management Personnel The names of the Company’s directors in office at any time during the financial year are as follows. Directors were in office for the entire period unless otherwise stated.

G Barnes Managing Director M Etheridge Chairman (Non-Executive) J Macdonald Director (Non-Executive - Technical) Resigned 22 October 2014 N Forsyth-Stock Director (Executive – Financial), also Chief Financial Officer Resigned 26 November 2014 E Cranston Director (Non-Executive) Appointed 22 October 2014 N Featherby Director (Non-Executive) Appointed 22 October 2014

(b) Compensation for Key Management Personnel Consolidated 12 months

ended 30 June 2015

$

6 months ended

30 June 2014 $

Short-term employee benefits 369,603 184,254 Short-term consulting fees 40,113 48,388 Post-employment benefits 28,739 15,315 Other long-term benefits 2,844 2,270 Share-based payments Non-monetary benefits

195 18,466

726 9,233

Total Compensation 459,960 260,186

27. SHARE-BASED PAYMENT EXPENSE

(a) Recognised share-based payments expenses

The expense recognised for the expensing of employee and consultant services received is shown in the table below:


ending 30 June 2015

$

6 months ending

30 June 2014 $

Expense recognised for directors’ services received Expense arising from equity-settled share-based payment transactions – directors (i) 195 726

195 726

(i) In 2013, 264,343 shares respectively were issued under the Company’s Employee Share Option and Loan Plan (“the Plan”) with a fair value of $1,471. These amounts were/are to be expensed over a 12 month period from the date of issue, consistent with the continuity service period under the Plan. The shares are fully vested at 30 June 2015. See Note 17.

(b) Weighted average remaining contractual life All options had expired at 30 June 2015 and 30 June 2014.

58

For

per

sona

l use

onl

y


47

26. DIRECTORS AND KEY MANAGEMENT PERSONNEL

(a) Details of Key Management Personnel The names of the Company’s directors in office at any time during the financial year are as follows. Directors were in office for the entire period unless otherwise stated.

G Barnes Managing Director M Etheridge Chairman (Non-Executive) J Macdonald Director (Non-Executive - Technical) Resigned 22 October 2014 N Forsyth-Stock Director (Executive – Financial), also Chief Financial Officer Resigned 26 November 2014 E Cranston Director (Non-Executive) Appointed 22 October 2014 N Featherby Director (Non-Executive) Appointed 22 October 2014

(b) Compensation for Key Management Personnel Consolidated 12 months

ended 30 June 2015

$

6 months ended

30 June 2014 $

Short-term employee benefits 369,603 184,254 Short-term consulting fees 40,113 48,388 Post-employment benefits 28,739 15,315 Other long-term benefits 2,844 2,270 Share-based payments Non-monetary benefits

195 18,466

726 9,233

Total Compensation 459,960 260,186

27. SHARE-BASED PAYMENT EXPENSE

(a) Recognised share-based payments expenses

The expense recognised for the expensing of employee and consultant services received is shown in the table below:


ending 30 June 2015

$

6 months ending

30 June 2014 $

Expense recognised for directors’ services received Expense arising from equity-settled share-based payment transactions – directors (i) 195 726

195 726

(i) In 2013, 264,343 shares respectively were issued under the Company’s Employee Share Option and Loan Plan (“the Plan”) with a fair value of $1,471. These amounts were/are to be expensed over a 12 month period from the date of issue, consistent with the continuity service period under the Plan. The shares are fully vested at 30 June 2015. See Note 17.

(b) Weighted average remaining contractual life All options had expired at 30 June 2015 and 30 June 2014.


48

(c) Range of exercise price All options had expired at 30 June 2015 and 30 June 2014.

27. SHARE-BASED PAYMENT EXPENSE (continued)

(d) Weighted average fair value No options were granted to directors and employees during the year

(e) Weighted average share price

The weighted average price per share during the year was $0.01 (2014: $0.01). 28. AUDITORS’ REMUNERATION

The auditor of Clancy Exploration Limited is Ernst & Young.


ended 30 June 2015

$

6 months ended

30 June 2014 $

Amounts received or due and receivable for: - an audit or review of the financial statements of the entity and its controlled entity – Ernst & Young

34,259 22,744

- other services in relation to the entity and its controlled entity - tax compliance services - Ernst & Young

9,800 9,500

44,059 32,244

59

For

per

sona

l use

onl

y


49

29. INFORMATION RELATING TO CLANCY EXPLORATION LIMITED (‘the Parent Entity")

2015 2014

$ $

ASSETS Current Assets 1,562,459 1,837,194

Non-current Assets 35,753 306,408

TOTAL ASSETS 1,598,212 2,143,602

LIABILITIES Current Liabilities 351,713 686,506

Non-current Liabilities 18,350 20,365

TOTAL LIABILITIES 370,063 706,871

NET ASSETS 1,228,149 1,436,731

EQUITY

Issued capital 15,667,200 14,917,200

Reserves 1,665,605 1,665,605

Accumulated losses (16,104,656 (15,146,074)

TOTAL EQUITY 1,228,149 1,436,731

Loss of the parent entity (958,584) (722,999)

Total comprehensive loss of the parent entity (958,584) (722,999)

Contingent liabilities of the parent entity: Nil Commitments for the acquisition of property, plant and equipment by the parent entity: Nil

Reserves included in the parent entity:

Consolidated 2015 2014 $ $

Share-based payment reserve 1,665,605 1,665,605 1,665,605 1,665,605

60

For

per

sona

l use

onl

y


49

29. INFORMATION RELATING TO CLANCY EXPLORATION LIMITED (‘the Parent Entity")

2015 2014

$ $

ASSETS Current Assets 1,562,459 1,837,194

Non-current Assets 35,753 306,408

TOTAL ASSETS 1,598,212 2,143,602

LIABILITIES Current Liabilities 351,713 686,506

Non-current Liabilities 18,350 20,365

TOTAL LIABILITIES 370,063 706,871

NET ASSETS 1,228,149 1,436,731

EQUITY

Issued capital 15,667,200 14,917,200

Reserves 1,665,605 1,665,605

Accumulated losses (16,104,656 (15,146,074)

TOTAL EQUITY 1,228,149 1,436,731

Loss of the parent entity (958,584) (722,999)

Total comprehensive loss of the parent entity (958,584) (722,999)

Contingent liabilities of the parent entity: Nil Commitments for the acquisition of property, plant and equipment by the parent entity: Nil

Reserves included in the parent entity:

Consolidated 2015 2014 $ $

Share-based payment reserve 1,665,605 1,665,605 1,665,605 1,665,605


50

30. FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES The consolidated entity’s principal financial instruments comprise cash, short-term deposits and available-for-sale

investments. The main purpose of these financial instruments is to finance the consolidated entity’s operations. The

consolidated entity has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the entire period under review, the consolidated entity’s policy that no trading in financial instruments shall be undertaken.

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities Level 2- Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable) Level 3- Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable). For financial instruments that are recognised at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisations (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For all financial instruments of the Company, the carrying value approximates the fair value.

The main risk arising from the consolidated entity’s financial instruments is cash flow interest rate risk. Other

minor risks are either summarised below or disclosed at Note 9 in the case of credit risk and Note 17 in the case of capital risk management. The Board reviews and agrees policies for managing each of these risks.

(a) Cash Flow Interest Rate Risk The consolidated entity’s exposure to the risks of changes in market interest rates relates primarily to the consolidated entity’s short-term deposits with a floating interest rate. These financial assets with variable rates expose the consolidated entity to cash flow interest rate risk. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing. The consolidated entity does not engage in any hedging or derivative transactions to manage interest rate risk. In regard to its interest rate risk, the consolidated entity continuously analyses its exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative investments and the mix of fixed and variable interest rates. The following tables set out the consolidated entity’s exposure to interest rate risk and the effect on profit before tax if interest rates at that date had been 20% (2014: 20%) higher or lower with all other variables held constant as a sensitivity analysis.

Year Increase/Decrease basis points

Effect on Profit Before Tax $

12 months ended 30 June 2015 +40 5,657 -40 (5,657) 6 months ended 30 June 2014 +48 7,496 -48 (7,496)

A sensitivity of 20% (2014: 20%) has been selected as this is considered reasonable given the current level of both short term and long term Australian dollar interest rates. A 20% (2014: 20%) sensitivity would move short term interest rates at 30 June 2015 from around 2.0% representing a 40 basis points shift either down to 1.6% or up to 2.4% (2014: from around 2.4% representing a 48 basis points shift either down to 1.92% or up to 2.88%). This could represent one or two adjustments upwards in the context of an easing of monetary stimulus by the Reserve Bank of Australia in response to stronger domestic conditions and an improving international economy.

61

For

per

sona

l use

onl

y


51

30. FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances is impacted, resulting in a decrease or increase in overall income.

(b) Liquidity risk The consolidated entity manages liquidity risk by maintaining sufficient cash reserves and through the continuous monitoring of budgeted and actual cash flows. Further, the consolidated entity only invests surplus cash with major financial institutions. Contracted maturities of payables:

Consolidated 2015

$ 2014

$

Payable - less than 6 months - 6 to 12 months - 1 to 5 years - later than 5 years

114,778

- - -

228,230 - - -

Total 114,778 228,230

(c) Commodity price risk The consolidated entity is exposed to commodity price risk. This risk arises from its activities directed at exploration and development of mineral commodities. If commodity prices fall, the market for companies exploring for these commodities is affected. The consolidated entity does not hedge its exposures.

(d) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The consolidated entity’s foreign transactions are immaterial and it is therefore not exposed to material foreign currency risk.

(e) Carrying values of financial instruments not recognised at fair value

Due to their short term nature, the carrying value of financial assets and financial liabilities, not recognised at fair value, recorded in the financial statements approximates their respective fair values, determined in accordance with accounting policies disclosed in Note 2 of the financial statements.

62

For

per

sona

l use

onl

y


51

30. FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances is impacted, resulting in a decrease or increase in overall income.

(b) Liquidity risk The consolidated entity manages liquidity risk by maintaining sufficient cash reserves and through the continuous monitoring of budgeted and actual cash flows. Further, the consolidated entity only invests surplus cash with major financial institutions. Contracted maturities of payables:

Consolidated 2015

$ 2014

$

Payable - less than 6 months - 6 to 12 months - 1 to 5 years - later than 5 years

114,778

- - -

228,230 - - -

Total 114,778 228,230

(c) Commodity price risk The consolidated entity is exposed to commodity price risk. This risk arises from its activities directed at exploration and development of mineral commodities. If commodity prices fall, the market for companies exploring for these commodities is affected. The consolidated entity does not hedge its exposures.

(d) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The consolidated entity’s foreign transactions are immaterial and it is therefore not exposed to material foreign currency risk.

(e) Carrying values of financial instruments not recognised at fair value

Due to their short term nature, the carrying value of financial assets and financial liabilities, not recognised at fair value, recorded in the financial statements approximates their respective fair values, determined in accordance with accounting policies disclosed in Note 2 of the financial statements.

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 DIRECTORS’ DECLARATION

52

The directors of Clancy Exploration Limited declare that: 1. In the opinion of the directors:

(a) the attached financial statements and the notes thereto of the Company and of the consolidated entity are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30

June 2015 and of their performance for the twelve months ended on that date; and (ii) complying with Accounting Standards;

(b) the attached financial statements and the notes thereto of the Company and of the consolidated entity are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board; and (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

2. This declaration has been made after receiving the declarations required to be made to the directors in accordance

with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2015.

Signed in accordance with a resolution of directors made pursuant to Section 295(5) of the Corporations Act 2001. On behalf of the Board

G. J. BARNES Managing Director Orange, NSW Dated this 18th September 2015

63

For

per

sona

l use

onl

y


53

680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au

Independent auditor's report to the members of Clancy Exploration Limited

Report on the financial report

We have audited the accompanying financial report of Clancy Exploration Limited, which comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement of income, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report.

64

For

per

sona

l use

onl

y


54

Emphasis of Matter Without qualifying our opinion, we draw attention to Note 2 in the financial report which describes the principal conditions raise doubt about the entity’s ability to continue as a going concern. As a result of these matters there is significant uncertainty whether the company will continue as a going concern, and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the company not continue as a going concern.

Opinion In our opinion:

a. the financial report of Clancy Exploration Limited is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity's financial position as at 30 June 2015 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Report on the remuneration report

We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion In our opinion, the Remuneration Report of Clancy Exploration Limited for the year ended 30 June 2015 complies with section 300A of the Corporations Act 2001.

Ernst & Young Ryan Fisk Partner Sydney 18 September 2015

65

For

per

sona

l use

onl

y

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 ASX ADDITIONAL INFORMATION

A. TOTAL EQUITY SECURITIES Total on Issue Ordinary Shares (CLY) 256,254,392

A total of 5,615,710 shares are subject to voluntary restrictions.

B. DISTRIBUTION OF EQUITY SECURITIES Shares 1-1,000 67 1,001-5,000 27 5,001-1,0000 61 10,001-100,000 291 100,001 and over 193 Total Shareholders 639

Shares Marketable Parcel $500

Price of security shares used in calculation of marketable parcel (10 October 2015) $0.007

No of securities in a marketable parcel 71,428 No of unmarketable parcels 388

C. TOP 20 SHAREHOLDERS (as at 30 September 2015) No. of shares % of Total

1 Macquarie Holdings No2 Pty Limited 50,000,000 19.51% 2 St Ives Gold Mining Co Pty Ltd 17,764,783 6.93% 3 Motte & Bailey Pty Ltd <Bailey Super Fund A/c> 14,731,500 5.75% 4 Wallis-Mance Pty Ltd <Wallis-Mance Family A/c> 10,292,085 4.02% 5 Alexander Angelopoulos 9,189,688 3.59% 6 Daniel Paul Wise <Ark Investment A/c> 6,667,354 2.60% 7 Flue Holdings Pty Ltd 5,442,692 2.12% 8 KP Sharma & KC Subedi 4,666,667 1.82% 9 Tranquilo Investment Ltd 4,599,279 1.79%

10 National Nominees Ltd 4,000,000 1.56% 11 Tattersfield Securities Ltd 3,838,040 1.50% 12 Australian Mineral & Waterwell 3,691,539 1.44% 13 Longbridge Pty Ltd <Super Fund A/C> 3,640,000 1.42% 14 Kobia Holdings Pty Ltd 3,600,000 1.40% 15 Tectonex Geoconsultants Pty Limited <Etheridge S/Fund A/C> 3,421,833 1.34% 16 Depothent Pty Ltd 3,110,000 1.21% 17 Damian Delaney 3,000,000 1.17% 18 Gordon Barnes 2,953,506 1.15% 19 Simon Saliba 2,500,000 0.98% 20 A&M Brien <A&M Brien S/F A/C> 2,454,463 0.96%

159,563,429 62.26%

66

For

per

sona

l use

onl

y


A. TOTAL EQUITY SECURITIES Total on Issue Ordinary Shares (CLY) 256,254,392

A total of 5,615,710 shares are subject to voluntary restrictions.

B. DISTRIBUTION OF EQUITY SECURITIES Shares 1-1,000 67 1,001-5,000 27 5,001-1,0000 61 10,001-100,000 291 100,001 and over 193 Total Shareholders 639

Shares Marketable Parcel $500

Price of security shares used in calculation of marketable parcel (10 October 2015) $0.007

No of securities in a marketable parcel 71,428 No of unmarketable parcels 388

C. TOP 20 SHAREHOLDERS (as at 30 September 2015) No. of shares % of Total

1 Macquarie Holdings No2 Pty Limited 50,000,000 19.51% 2 St Ives Gold Mining Co Pty Ltd 17,764,783 6.93% 3 Motte & Bailey Pty Ltd <Bailey Super Fund A/c> 14,731,500 5.75% 4 Wallis-Mance Pty Ltd <Wallis-Mance Family A/c> 10,292,085 4.02% 5 Alexander Angelopoulos 9,189,688 3.59% 6 Daniel Paul Wise <Ark Investment A/c> 6,667,354 2.60% 7 Flue Holdings Pty Ltd 5,442,692 2.12% 8 KP Sharma & KC Subedi 4,666,667 1.82% 9 Tranquilo Investment Ltd 4,599,279 1.79%

10 National Nominees Ltd 4,000,000 1.56% 11 Tattersfield Securities Ltd 3,838,040 1.50% 12 Australian Mineral & Waterwell 3,691,539 1.44% 13 Longbridge Pty Ltd <Super Fund A/C> 3,640,000 1.42% 14 Kobia Holdings Pty Ltd 3,600,000 1.40% 15 Tectonex Geoconsultants Pty Limited <Etheridge S/Fund A/C> 3,421,833 1.34% 16 Depothent Pty Ltd 3,110,000 1.21% 17 Damian Delaney 3,000,000 1.17% 18 Gordon Barnes 2,953,506 1.15% 19 Simon Saliba 2,500,000 0.98% 20 A&M Brien <A&M Brien S/F A/C> 2,454,463 0.96%

159,563,429 62.26%


D. SUBSTANTIAL SHAREHOLDERS

The Company’s Register of Substantial Shareholders, prepared in accordance with Chapter 6C of the Corporations Act 2011, recorded the following information as at 10 October 2015;

Macquarie Holdings No 2 Pty Ltd Gold Fields Ltd

50,000,000 17,764,783

19.51% 6.93%

E.

SHARES ISSUED PURSUANT TO EMPLOYEE SHARE AND LOAN PLAN (THE PLAN”) 2015 Last 5 years

Total Shares issued pursuant to the Plan and on issue as at start of period 5,615,710 - Number of Shares issued to eligible employees and consultants pursuant to the Plan Number of Shares issued to Directors pursuant to the Plan

- -

3,053,681 3,151,945

Total Shares issued pursuant to the Plan - 6,205,626 Less Shares Bought Back following resignation of an eligible employee Less Shares sold on market following resignation of an eligible employee

- -

(294,958) (294,958)

Total Shares issued pursuant to the Plan and on issue as at 30 June 2015 5,615,710 5,615,710 All shares issued to Directors under the Plan were approved pursuant to ASX Listing Rule 10.14 obtained at general meetings of the Company held on 29 May 2011 and 24 May 2013. 5,615,710 shares issued under the Plan are subject to voluntary restrictions.

F. VOTING RIGHTS ATTACHING TO EQUITY SECURITIES

Subject to the Constitution of the Company and any rights or restrictions at the time being attached to a class of shares, at a general meeting of the Company every Shareholder present in person, or by proxy, attorney or representative has one vote on a show of hands, and upon a poll, one vote for each Share held by the Shareholder. In the case of an equality of votes, the chairperson has a casting vote.

Options to acquire ordinary shares do not carry any voting rights.

67

For

per

sona

l use

onl

y

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 LIST OF MINERAL TENEMENTS

Clancy tenement listing (As at 30 September 2015)

State Project Lease No Status JV Project Manager Clancy

interest Area (km2) Note

NSW Condobolin EL7748 Renewed Yes Ramelius 100% 181.5 Ramelius Resources Ltd earning 80%

NSW Genaren EL7927 Renewed No Clancy 100% 193.6

NSW Cundumbul EL6661 Renewed No Clancy 100% 141.4


NSW Fairholme EL6552 Renewed Yes Clancy 51% 54.5 Kaizen Discovery Inc earning 65%


NSW Kiola EL8151 Granted No Clancy 100% 284.2

NSW Orange East EL6181 Renewed No Clancy 100% 40.2

NSW Trundle EL8222 Granted Yes HPX 100% 167.2 High Power Exploration Inc earning 51%

NSW Mount Tennyson EL8226 Granted No Clancy 100% 45.8

NSW Mount Pleasant EL8237 Granted No Clancy 100% 63.5

NSW Koobah EL8302 Granted No Clancy 100% 28.6

TAS Lake Margaret EL28/2009 Renewal pending Yes Bass

Metals 25% 59.0 Clancy interest carried to Prefeasibility study

TAS Sock Creek EL20/2010 Granted Yes Bass Metals 25% 11.0 Clancy interest carried

to Prefeasibility study

TAS Oonah EL63/2004 Renewed Yes TNT Mines 25% 24.0 Clancy contributing

68

For

per

sona

l use

onl

y

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 LIST OF MINERAL TENEMENTS

Clancy tenement listing (As at 30 September 2015)

State Project Lease No Status JV Project Manager Clancy

interest Area (km2) Note

NSW Condobolin EL7748 Renewed Yes Ramelius 100% 181.5 Ramelius Resources Ltd earning 80%

NSW Genaren EL7927 Renewed No Clancy 100% 193.6





NSW Kiola EL8151 Granted No Clancy 100% 284.2

NSW Orange East EL6181 Renewed No Clancy 100% 40.2

NSW Trundle EL8222 Granted Yes HPX 100% 167.2 High Power Exploration Inc earning 51%

NSW Mount Tennyson EL8226 Granted No Clancy 100% 45.8

NSW Mount Pleasant EL8237 Granted No Clancy 100% 63.5

NSW Koobah EL8302 Granted No Clancy 100% 28.6

TAS Lake Margaret EL28/2009 Renewal pending Yes Bass

Metals 25% 59.0 Clancy interest carried to Prefeasibility study

TAS Sock Creek EL20/2010 Granted Yes Bass Metals 25% 11.0 Clancy interest carried

to Prefeasibility study

TAS Oonah EL63/2004 Renewed Yes TNT Mines 25% 24.0 Clancy contributing

Clancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 CORPORATE GOVERNANCE

In March 2014, the ASX Corporate Governance Council released a third edition of the ASX Corporate Governance Council’s Principles and Recommendations (ASX Principles). The Group’s Corporate Governance Statement dated 15 October 2015 (which reports against these ASX Principles) may be accessed from the Company’s website at; www.clancyexploration.com/content/corporate%20governance.

69

For

per

sona

l use

onl

y

Clancy Exploration LimitedACN 105 578 756

PO Box 7040 Orange NSW 2800Ph: (02) 6361 1285 Fax: (02) 6361 1202

Email: [email protected]: www.clancyexploration.com ANNUAL REPORT 2015

ACN 105 578 756

CLA

NC

Y EXPLO

RATION

LIMITED

A

NN

UA

L REPORT 2015

For

per

sona

l use

onl

y

Documents

CLANCY EXPLORATION LIMITED - ASXClancy Exploration Limited ABN: 65 105 578 756 and controlled entity 2015 CHAIRMAN’S LETTER 2 Dear Fellow Shareholders, On behalf of the board, I